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Market Matters – Summer 2019

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

02/09/2019

The housing market is showing some degree of resilience against a background of politic and economic uncertainty. House prices have largely been flat over the last few months and this has continued in June, with Halifax reporting that average house prices have fallen by 0.3% [1]. The uncertain climate and the low stock of available housing are being blamed for downward trends in the number of houses sold, with HMRC reporting that residential transactions in May 2019 were 11% lower than May 2018.

Despite flat house prices, the RICS is reporting an increase in buyer enquiries, although it urges caution in treating this as a sign that the pressures on supply in the market have eased, as stock levels with estate agents remain at records lows. The RICS also notes a continuing trend of a decline in buy-to-let and investment properties following changes to the tax treatment of investment properties, although demand from tenants remains the same. As a result, rents are expected to rise over the next 12 months at a faster rate than house prices.

UK Finance has recently published its own research about mortgages in the Northern Powerhouse, noting that although home-mover activity was falling across other regions in the UK in 2018, it was strong across most of the North.

UK Finance’s briefing reveals that amongst the Northern Powerhouse cities, Hull had the strongest growth for first time buyers, home movers and buy-to-let investors. Nationwide’s Chief Economist has also confirmed, in an article for Mortgage Finance Gazette, that prices have fallen in London for the eighth quarter in a row, whereas Yorkshire & Humberside is the best performing region in England.

According to UK Finance’s latest figures on lending trends, there were 30,720 new first-time buyer (FTB) mortgages completed in May 2019 – 0.5% more than in the same month in 2018.  The value of new lending for FTBs in the month was £5.1bn – 1.3% more on a year-on-year comparison.  The average loan size in May 2019 was £218,855 for home-movers (+2.9% since 2018) and £166,977 for FTBs (+0.7% since 2018).

The second mortgage market remains buoyant. Compared with May 2018, the number of new agreements grew by 22%, and increased in value by 23%. In the 12 months to May 2019, the number of new agreements grew by 16% and increased in value by 16%, compared with the same period the previous year, with the average second mortgage advance remaining stable at c.£45,325.

In summary, Brexit and ongoing political uncertainty are causing the market to remain flat, but there are more positive trends in some regions.

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