Market activity is ‘holding up well’ following stamp duty changes, according to Nationwide’s chief economist, with industry leaders welcoming continued signs of resilience.
Commenting on the release of the building society’s monthly house price index, Robert Gardner said that despite wider economic uncertainties in the global economy, ‘underlying conditions for potential home buyers in the UK remain supportive’. He added:
“Unemployment remains low, earnings are rising at a healthy pace (even after accounting for inflation), household balance sheets are strong and borrowing costs are likely to moderate a little if Bank Rate is lowered further in the coming quarters as we, and most other analysts, expect.”
The latest index from Nationwide reveals that house prices increased by 0.5% between April and May of this year, bringing the average UK house price to £273,427. On an annual basis, the average house price increased by 3.5% up from a 3.4% annual rate of growth in April.
‘This suggests to us that the stamp duty impact on house prices was minimal and that a combination of rising wages and falling mortgage rates continues to underpin house prices’, said Anthony Codling, managing director at RBC Capital markets.
Benham and Reeves director Marc von Grundherr said the market was returning to ‘business as usual’ and said the London estate agents had seen ‘consistently strong growth in mortgage approval volumes, more deals done and a strengthening in property values’.
Although data from the Bank of England shows a 3,100 drop in the number of mortgage approvals for house purchases, Zoopla’s executive director Richard Donnell said this isn’t indicative of a slow market. He explained:
“A slowdown in demand for mortgages in April reflects the impact of a late Easter. We expect mortgage data for May to increase in line with a pick-up in new sales being agreed, which are running at their highest level for four years.”
Iain McKenzie, CEO of The Guild of Property Professionals, said demand remains resilient and Nationwide’s figures ‘underscore a quiet confidence’ in the housing market.
He added:
“As ever, there are competing forces at play. The recent interest rate cut by the Bank of England to 4.25%, coupled with falling mortgage rates and more flexible lending criteria, is undoubtedly supporting buyer confidence. Sub-4% mortgage deals are now a reality for many with strong loan-to-value positions, and with swap rates improving, we expect this to gradually open the door to more buyers. These shifts are easing affordability pressures and encouraging market participation.”
And, while ‘mindful’ of the broader economic backdrop, McKenzie believes the next six months will be positive.
He concluded:
“It’s likely we’ll see a short period of adjustment, but agent sentiment, as captured in the latest RICS data, suggests optimism for the second half of the year. Demand is proving resilient and the average time to sell is falling, both signs of a market moving in the right direction.”
