‘Cloudy’ outlook for property market
The price of the average house has now reached £205,240, though the rate of annual house price growth stumbled from 4.5% in December to 4.3%.
Robert Gardner, chief economist at Nationwide, described the annual price growth as “broadly stable”, but warned that the outlook for the property market “remains clouded”.
He said: “On the one hand, there are grounds for optimism. The economy has remained far stronger than expected in the wake of the Brexit vote”. However, he suggested that real wages were likely to come under pressure as inflation rose, with employment growth also likely to “moderate”.
Jonathan Hopper, managing director of Garrington Property Finders, suggested the property market had settled into its “familiar pattern of steady growth” following the “Brexit earthquake”.
He continued: “But the days of double-digit price rises are gone, and while the market fundamentals are strong enough to drive further growth this year, progress will be sedate rather than stellar.
“On the front line we’re seeing that buyers are frequently price sensitive, yet committed. Prices are being supported by the imbalance between demand and supply, but good deals are being done on correctly-priced quality homes.”
Mario Berti, chief executive officer of Octopus Property, warned that rising inflation had the potential to “play havoc with household finances”, which in turn could hit property values, but suggested borrowing costs were still “exceptionally competitive”.
He said: “Where interest rates are headed in response to rising inflation could be decisive for the outlook of the property market in 2017. If they do rise, it is likely that would trigger a shift in sentiment and start to put pressure on prices.
“However, any downward pressure on prices is likely to be mitigated by continued tight supply of housing stock and demand from overseas buyers who are attracted by the current level of the pound.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Record low mortgage rates are largely responsible for much of the resilience we have seen in the housing market, with many borrowers taking advantage of some of the cheapest rates ever.
“We expect this to continue during the spring with lenders showing encouraging signs of wanting to do business by cutting rates further.”