UK house prices experienced their steepest drop for nine months in January as eyes turn towards the possible impact of Brexit on the housing market, figures released today showed.
House prices dropped 2.9 per cent in January compared to December’s 2.5 per cent rise, Halifax house price index data revealed. That is just short of April's 3.1 per cent monthly drop.
But they grew 0.8 per cent in the three months to January compared to the same period last year, the bank said, with the national average price standing at £223,691.
That represents a 0.6 per cent decline on a quarterly basis, however.
Russell Galley, managing director of Halifax, said the month-to-month drop was the second time since 2017 that prices have fallen in the new year.
“However, the bigger picture is actually that house prices have seen next to no movement over the last year,” he added.
“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.
“There’s no doubt that the next year will be important for the housing market with much of the immediate focus on what impact Brexit may have. However, more fundamentally it is key underlying factors of supply and demand that will ultimately shape the market.”
Those factors include a record high employment rate as wages grow and inflation stays low, but steeper prices mean funding deposits is still difficult.
“On balance therefore we expect price growth to remain subdued in the near term,” Galley said.
Brexit hangs over housing market
North London estate agent and former Rics residential chairman, Jeremy Leaf, warned that a Brexit deal is vital in order to give the housing market a lift.
"What we are seeing on the ground is the release of some pent-up demand prompting more listings, viewings and offers over the past few weeks than we dared hope for," he said. "However, interest is very patchy and real value must be perceived, otherwise little market change will result.
"Looking forward, we do not expect any significant improvement at least until the odds on a Brexit deal improve."
House prices hit new heights of volatility
Lucy Pendleton, founder-director of independent estate agent James Pendleton, called the latest data a "handbrake turn" as house prices reach "new heights of volatility".
“The rarified air of political uncertainty and low supply is sending the market into a bit of a spin," she added, saying it was "abundantly clear" that Brexit uncertainty is responsible for the latest market drop.
Green shoots of hope
Boss of business growth adviser Yomdel, Andy Soloman, said house price growth has "hit a brick wall", but said "there is little reason to run for the hills".
"The coming months are likely to bring some small green shoots of price stability and once we emerge from our Brexit blanket in to the cold light of day having reached an agreement, further stability and upward growth should return to the market,” he added.
“If the UK does enjoy a good EU exit, then a relief rally could be in store given the plentiful government support for buyers, cheap borrowing and rising wages coupled with low supply,” added Pendleton.