Market Matters: November 2018

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A slightly negative trend for national house prices is being fed by a recent softening in new buyer demand, according to the RICS UK Residential Market Survey for October 2018. Sales were reported to be flat or negative across 11 of the 12 UK regions/countries during October. Respondents to the survey were doubtful that activity would pick up over the next 12 months.

The Halifax house price index for October 2018 indicates that prices in the three months to October were up 1.5% on the same period in 2017, although this is the lowest rate of growth since March 2013.

Figures published by UK Finance in November support the impression that there has been a softening in the market, with 8.4% fewer new home mover mortgages completed in October 2018 compared to the same month in 2017. UK Finance comments that the figures indicate that demand for house purchases for both first time buyers and home movers has decreased, due to ongoing affordability constraints especially in London and the South East.

Mortgage arrears remain at historic lows, with 5% fewer homeowner mortgages in arrears of 2.5% or more of the mortgage balance than Q3 of 2017.

UK Finance also reported on 21 November 2018 that there were 11,700 first-time buyer mortgages completed in London in Q3 of 2018, a 2.6% increase on the same period in 2017. This represented £3.55 bn of new lending. UK Finance commented that London’s mortgage market remained resilient, and that the number of first time buyers was boosted by schemes such as Help to Buy.

The Help to Buy scheme has recently been extended until 2023. The Mortgage Finance Gazette has reported that data collated by indicates that 38% of people who have used Help to Buy equity loans in 2018 would no longer qualify for the scheme after 2021, when it will be restricted to first time buyers only.

Brexit continues to cause uncertainty in the market, although the regional picture remains varied.