‘Crunch time’ for property market as prices drop in July
Despite this, over the previous three months prices were up by 0.4 per cent, while on an annual basis house prices rose by 4.1 per cent.
As a result the average property is now worth £236,120.
Russell Galley, managing director of Halifax, suggested the market was continuing to “tread water” with marginal increases or decreases each month.
He continued: “We have seen a reported drop off in the number of properties sold during the early months of summer, which may lead some to speculate a downturn is on the horizon. However, new buyer enquiries are up, and favourable mortgage affordability – driven by low interest rates and strong wage growth – should continue to underpin prices for the time being.”
Galley concluded that over the longer term there was unlikely to be any improvement in activity levels until there was “some form of resolution” to the current economic uncertainty.
Andrew Montlake, managing director of mortgage broker Coreco, said that it was now “crunch time” for the property market, with the potential impact of a no-deal Brexit.
He said: “The consensus appears to be that the property prices will suffer if we exit the EU without a deal. But if no-deal is more damp squib than end of the world then the property market could rediscover its mojo.”
Montlake added that with households bracing themselves for “potentially strong turbulence” remortgaging activity was likely to remain strong.
Joshua Elash, director of specialist lender MT Finance, admitted that the market was flat and warned that the “robustness of the property market” is about to be put to the test.
“If Brexit or deflationary forces lead to the Bank of England increasing the base rate, there will be consequential pressure on homeowners to sell as they struggle to deal with meeting the cost of increased mortgage payments.
“In this scenario we would expect to see more significant downward pressure on prices.”
Market on a knife edge
Jonathan Hopper, managing director of estate agent Garrington Property Finders, cautioned that the spring bounce was “morphing into a summer slump”, with two straight months of falling prices suggesting the momentum from the spring has now petered out.
He added: “In the weakest markets, such as London and the South East, buyers are having a field day and we’re seeing homes sell for as much as 30 per cent below original guide price.”
In contrast though, in areas “starved of supply”, good homes are selling fast and in some cases over the asking price, Hopper noted.
“Such regional polarisation illustrates just how the market as a whole is resting on a knife edge. The next 12 weeks should clarify whether Britain’s economic prospects get very good – or very bad – very quickly.”