There was widespread concern that a vote for Brexit could see house prices plummet, and while such a downturn hasn't yet been apparent, there's a definite softening in the air. Indeed, figures from Halifax show that house price growth slowed to a near three-year low in August.
The figures, from the latest Halifax House Price Index, show that prices rose by 6.9% year-on-year in August, marking a notable drop from the growth rate of 8.4% recorded in both June and July – and making it the lowest annual rise seen since October 2013, when it also stood at 6.9%.
The quarterly growth rate also dipped, now at 0.7%, down from 1.5% in July and the lowest since December 2014 (0.5%). Prices actually fell on a monthly basis for the second month in succession, this time by 0.2%. This is a slight improvement on July's drop of 1.1%, but means that the average house price now stands at £213,390, almost £2,000 lower than in June (£216,726).
But are recent events really behind it all? Perhaps not. Instead, it seems that the slowdown was widely expected, as Halifax housing economist Martin Ellis explains: "The slowdown in the rate of house price growth is consistent with the forecast that we made at the end of 2015. Increasing difficulties in purchasing a home as house prices continued to increase more quickly than earnings were expected to constrain demand, curbing house price growth."
Other commentators agree that Brexit isn't to blame, such as eMoov.co.uk's CEO Russell Quirk, who says that "the decrease is nothing more than a seasonal adjustment due to the slower pace of the market during the summer months. It may seem like Britain's decision to leave the EU is starting to take its toll on the UK property market, but in reality, the timing of the referendum vote is just coincidental with the type of market movement traditionally experienced during July and August."
Others appreciate that the market may have dampened slightly given the uncertainty of recent months, but the robust annual growth rates still show signs of stability and resilience in the face of such pressures. Strong background indicators (such as high employment and a shortage of housing stock) mean that house prices are unlikely to plummet too dramatically, but many are still cautious.
Indeed, Martin adds that there are signs of "a softening in sales activity", with data from HMRC showing that housing sales fell by 1% between June and July following successive increases in the two preceding months. Mortgage approvals for house purchases also fell in July, according to the Bank of England (down by 5% to 60,192, the lowest seen since January 2015), while the level of homes available for sale remains among record low levels.
While the latter could help ensure house prices remain intact, the drop in activity overall suggests that many buyers and sellers are exercising caution, with economic volatility overall potentially exerting additional pressure. Nonetheless, the market remains relatively robust, and with average mortgage rates continuing to fall – a happy side effect of the vote and resulting base rate cut – now could be a great time to consider your options. Many remortgagors in particular are taking advantage of things, so check out our mortgage best buys and see if you can get involved.
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