Monitoring the housing market is very important for many, particularly those doctors and dentists who are looking to purchase their first home or who are investing in buy-to-let properties. The decision to trigger Article 50 and to start the negotiations for the UK to leave the EU has made the UK economic environment unstable and this is having an effect on the housing market. Our monthly Property Price Update gives you a summary of what the experts in the market are saying.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
What is happening with UK property prices?
Figures published by Nationwide show that the average property price for August was £210,495. This is a small drop from July, where the average property price was reported as being £211,671.
The annual house price growth stands at 2.1%. This is compared to 2.9% for July.
The slowdown in the annual growth figures to 2-3% from 4-5% seen during 2016 shows that the housing market and the wider economy is going through a period of ‘cooling’.
Strengthening economy but falling wages is affecting the housing market
Whilst the UK economy continues to grow (0.3% per quarter for the first half of 2017) this growth is nearly half of what we saw during the same period in 2016.
In June, the number of mortgages approved dropped to its lowest level for nine months to 65,000. Surveyors are also reporting that there is a softening in the number of new buyer enquiries.
These figures come as a surprise as the UK employment numbers are particularly strong.
125,000 jobs were created in the three months to June. The unemployment rate dropped to 4.4%, the lowest it has been for 40 years and mortgage rates remain at a low level.
However, falling wage, means people are faced with making cut backs. The high cost of food and increasing utility bills are putting a strain on people’s finances. The largest chunk of anyone’s household expenses comes in the form mortgage payments.
Surprisingly, nearly 60% of people’s take-home pay in London is spent on mortgage repayments.
Current forecasts and predictions
All these factors are leading experts to predict that the housing market will remain subdued but predict the lack of available housing stock will mean house prices will rise by approximately 2% over 2017 as a whole.