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Market Matters – Spring 2019

Holding house keys on house shaped keychain in front of a new home Print publication

11/04/2019

In this regular feature, Banking Litigation Associate Rachel Elgar provides updates and commentary on trends and issues in the UK property market.

The Bank of England’s inflation report for February 2019 noted that activity in the housing market has been subdued. UK house prices grew by 1.7% in the year to January 2019, down from 2.2% in the year to December 2018 according to the UK Government House Price Index. This is the lowest annual growth for the UK since June 2013.  However the Halifax House Price Index indicates house prices in the three months to February were 2.8% higher than in the same 3 months a year earlier and have risen by 1.8% compared to the previous three with the average house price now £236,800.  It seems that monthly UK home sales remain slow but steady, with 101,170 homes sold in January and mortgage approval rates also on the rise.

77% of respondents to the RICS Residential Market Survey to 14 March 2019 cited Brexit uncertainty as the biggest challenge in the market currently. Demand is also being significantly limited by a lack of stock, with the number of properties listed on estate agent books having fallen to a record low. However, on a somewhat positive note, whilst outlook from respondents was subdued for the next three months, they were largely of the view there would be a market uptake over the next twelve [1].

In terms of mortgage lending statistics, according to the FCA the outstanding value of all residential mortgage loans was £1,442 billion in the final quarter of 2018, 3.3% higher than a year earlier. The value of new mortgage commitments also increased to £68.0 billion, 4.6% higher than a year earlier. The value of outstanding balances with some arrears fell slightly in the quarter to £14.4 billion – as a proportion of total balances it has remained at 1.0%.

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[1] That is largely consistent with messages coming out of a recent Which? report into the housing market. See our recent briefing for more information.

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