Halifax today put out its latest house price figures – they make for totally unscary reading.
House prices were 0.4 per cent up on the previous month in May; 0.2 per cent down over the three months to May on the previous three months, and still 3.3 per cent up over the year.
It’s a slowing of growth, for sure, but there’s no klaxon.
Alex Gosling, CEO of HouseSimple.com, said: “Let’s not raise the white flag just yet. This is not a property market in crisis – it’s just that we’re so used to seeing prices rise relentlessly every month that everyone is ready to press the panic button the moment prices stall.
“It’s likely growth will be low single digits this year, but the buyers and sellers are still out there. Buyers are spending more time looking before committing to a purchase. And the continued supply shortage is still supporting prices.”
As David Hollingworth of L&C, the mortgage broker, matter of factly puts it: “The flattening in annual house price growth and slowing in transaction levels comes at a time of substantial uncertainty for potential homebuyers.”
There’s that word “uncertainty” again – arguably a constant in our lives but at times like this, the dial is turned up a few notches. Surely that’s got to be bad news for house prices?
With Brexit and the General Election, general expectations may have been for steeper price declines than the figures show.
It’s true that house prices don’t typically like uncertainty, but right now this particular uncertainty, says, Mr Hollingworth, could ironically be supporting prices at a time of ultra low interest rates: “Higher inflation and the resulting higher cost of living, combined with uncertainty around the outcome not only of the election, but also Brexit negotiations, are bound to see some buyers and sellers adopt a wait and see approach. However, that in turn limits supply of homes on the market and with ultra low mortgage rates widely available, prices are still likely to hold up.
Demand could even experience a rise as first-time buyers, who had been waiting in the wings, start to sense their chance: “Demand from first time buyers remains good and they will have a better chance to build a deposit without prices spiralling out of their reach quicker than they can save. That may also be helped by the reduced level of activity in the Buy to Let market as landlords get to grips with higher stamp duty charges, reduction in tax relief and tighter lending criteria.”
The housing market is remarkably good at correcting itself. Those corrections can sometimes come from the factors that you think will send it into a complete tailspin. Expect the unexpected. It’s a mantra for our times. It’s also pretty much impossible. In times like this, perhaps the most sensible course is not to expect anything at all.
