Inflation has taken over from Brexit as “the biggest threat to affordability and confidence in the housing market” according to a leading estate agent.
The statement, from former RICS residential chairman and London estate agent Jeremy Leaf, comes after the announcement that inflation – as measured by the Consumer Price Index – had leapt to 1.6 per cent, the highest for 18 months. The rise was bigger than expected, and attributed to the effects of the fall in Sterling since the Brexit vote.
“If the cost of everything is going up, people feel poorer and less inclined to take on further debt. With the housing market it always comes down to confidence and if people see bad news, they tend to overreact, sit on their hands and do nothing” warns Leaf.
Leaf’s comments also came after the Office for National Statistics released its figures for house price rises in the year to November – the latest available.
Prices rose by an average of 6.7 per cent in the year to November, across the UK, which was up from 6.4 per cent a month earlier.
The average UK house price was £218,000 in November 2016. This is £14,000 higher than in November 2015 and £2,000 higher than October.
The biggest rises were as usual seen in England, where prices increased 7.2 per cent in the 12 months to the end of November – the average price is now £234,000.
Wales saw house prices increase by 4.1 per cent over the same period to £147,000. In Scotland, the average price increased by 3.3 per cent over the year to stand at £143,000. The average price in Northern Ireland is £124,000.
“The house price index findings are not too surprising because … they are a little bit historic. We expect to see some moderation in price growth in future as we have already seen on the ground in the past month or so. Shortage of stock and increased nervousness is showing itself in only slightly higher prices and lower activity” claims Leaf.