UK house prices: Brexit clouds lift, but coronavirus threat looms
UK house prices rose 2.8 per cent in February compared to the same month last year, Halifax data showed today.
Homes’ values increased 0.3 per cent month on month and 2.9 per cent on a quarterly basis, Halifax’s House Price Index found.
That left the average UK house price at £240,677 in February.
But while the threat of Brexit uncertainty has faded for now, the new risk of a spiking number of coronavirus cases loomed over UK house prices.
Russell Galley, managing director of Halifax, said: “The UK housing market has remained steady heading into early spring.
“Much like we saw in January, the increases seen in February reflect the continued improvement of key market indicators.
“The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand.
“Looking ahead, there are a number of risks, including the potential impact of coronavirus, which continue to exert pressure on the economy and we wait to see how these will affect housing market sentiment later in the year.”
Brexit clouds lift from UK housing market
Property experts concurred that Brexit uncertainty has mostly ended after Nationwide’s data also showed a healthy bump in UK house prices in February.
Director of estate agent Benham and Reeves, Marc von Grundherr, welcomed it as a new sign of the UK property market’s health.
“The UK property market has awoken from its politically induced slumber and is firing on most, if not all cylinders so far this year,” he said.
“With the burden of Brexit lifted, the jobs market strong and borrowing rates at near record lows, there is renewed vigour in UK bricks and mortar,” Jonathan Samuels, CEO of property lender, Octane Capital, said.
“The strong January mortgage approvals data published earlier this week shows many buyers have turned a corner psychologically.”
Lucy Pendleton, founder director of independent estate agents James Pendleton, added: “It’s no surprise to see continued healthy price growth like this. Demand and supply have both been rebounding recently but, so far, the number of new buyers is definitely outpacing the return of sellers.”
Coronavirus threatens UK house prices
But observers also warned that the threat of a worldwide coronavirus outbreak could conspire to land a fresh blow on the UK housing market.
“We’ve seen the dark clouds of Brexit-inspired uncertainty hang over the market for some time causing a drop in price growth and transactions,” Stone Real Estate founder Michael Stone.
“However, just as they finally start to make way for blue skies and buoyant price growth, there could be another storm front rolling in in the form of the threat from the coronavirus.”
Stone warned that new builds abroad “have all but ceased” and travel restrictions have stopped developers from attracting foreign investors.
“If this persists for a notable length of time the very real possibility is a reduction in foreign investment and a negative impact on house prices,” he said.
Benham and Reeves boss von Grundherr said his last survey found 17 per cent of people have put house buying and selling plans on hold due to the coronavirus.
“If this hesitation were to spread as rapidly as the cause itself, we could see current growing momentum peter out as market activity stalls once again.”
Pendleton also warned of the impact of the coronavirus outbreak. She said the estate agent saw its first sale fall through after an events industry worker pulled out of a purchase with his job at risk.
“The hope is this will remain an isolated case but the impact of the virus will become clearer in March,” she said.
“For now, with valuations still rising and competition for certain properties still fierce, buyers have begun to put in offers on multiple properties in a bid to secure an option before stalling over exchange of contracts in case something better comes along. This could create an unappealing log jam and put more completions at risk if Covid-19 starts to become a major factor.”
Buyers wait for Budget 2020 and rate cut
But von Grundherr added “the vast majority” of buyers are unfazed and a spending Budget and an interest rate cut could help bolster UK house prices.
“The worst thing that could happen to the property market is for it to fall into the same old cycle of boom and bust,” Samuels warned.
“The two key threats to the property market at present are the impact of the coronavirus if things escalate and a negative, even rancorous, outcome from our trade negotiations with the EU.
“What we want to see during 2020 is a rise in transactions, increased liquidity and steady and sustainable price growth.”