Samir Salya looks at the UK’s house prices

In an unexpected turn of events, house prices in the UK fell last month (June 2017). The average cost of a UK home fell by 1 per cent to £218,390, according to information from Halifax. This is the first reported drop in five months.

The fall in house prices has brought the rate of growth annually to the lowest level since 2013. It’s the latest indication that people are keeping away from committing to major spending projects. This is most likely because of the uncertain economy forecasts due to Brexit, the snap General Election and general global uncertainty.

Experts previously predicted a rise

Economists had previously reported that they expected to see a 0.2 per cent increase, so these results go against predictions. House price inflation fell from a recorded 3.3 per cent in May 2017 to 2.6 per cent in June. This is the weakest recorded since May 2013.

A housing economist for the Halifax commented that the flattening of house prices is down to consumers being more cautious before making major purchases. They said: “Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages. This, combined with the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months.”

Nationwide contradicts Halifax

Contradicting Halifax, rival mortgage lender Nationwide has said that UK house prices actually rose in June 2017. They report a growth of 1.1 per cent, but this is across the country, although they agree that there has been a downturn in London.

It looks like the combination of low rates on mortgages and fewer properties actually coming on to the market, will prop up the market. This could prevent an overall drop in prices for the whole of 2017. This is supported by the fact that estate agents have reported a fall in new properties coming on to the market for the 15^th month in a row (this data is from the Royal Institution of Chartered Surveyors).

This could mean that house prices should rise overall. A property expert at Capital Economics, Hansen Lu, agrees. He said: “It seems unlikely that the recent softness in prices is the start of a major decline. Yet it is also hard to see the market gaining much momentum. After all, while house prices have come down a little, they are still close to a record high. And we expect that will continue to dampen buyer demand.”

About Samir Salya

Samir Salya is the Chairman of Reign Holdings, and is involved in UK and UAE real estate and construction. Samir holds over 20 years’ experience in executive management, business expansion, performance improvement, sales and marketing.