Property prices in the UK dipped marginally at the end of 2017, down by 0.6% month on month in December to an average of £225,021, according to the latest index figures.
Year on year prices are still up by 2.7% and on a quarterly basis they were 1.3% higher in the final quarter of the year compared with the third quarter, the data from lender the Halifax also shows.
Russell Galley, managing director of Halifax Community Bank, pointed out that while prices in the three months to December were 1.3% higher than in the previous quarter, there has been a gradual slowdown from 2.3% in both October and November.
He also pointed out that the annual rate of growth has also moderated to 2.7% from November’s 3.9% and the 0.6% fall in December was the first monthly decline in six months for the index.
‘As we’d anticipated, the housing market in 2017 followed a similar pattern to the previous year. House price growth slowed, whilst building activity, completed sales and mortgage approvals for house purchase all remained flat,’ said Galley.
‘This has been driven by a squeeze on real wage growth and continuing uncertainty over the economy. However, nationally house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of house building, high employment and a continuation of low interest rates making mortgage servicing affordable in relative terms,’ he added.
Overall the Halifax expects annual price growth to continue in the range of 0% to 3% at the end 2018. Galley explained that the main driver of this forecast is the continuing effects of the squeeze on spending power as inflation has outstripped wage growth and the uncertainty regarding the prospects for the UK economy next year.
However, according to Jeff Knight, director of marketing at Foundation Home Loans, the recent stamp duty cut for first time buyers and continued demand will inject additional momentum into the property market.
‘Despite announcements in the Autumn Budget focused on sorting the lack of supply once and for all, the fact remains that not enough homes are being built, which continues to inflate prices even in the previously more affordable regions outside London,’ he said.
‘Until supply catches up, it’s crucial that supportive measures are put in place to ensure the rental sector is supported. Improving the quality and choice of rental homes for tenants must be top of the priority list for the year ahead,’ he added.
Russell Quirk, chief executive of eMoov believes that while price growth is likely to remain subdued for the immediate future, the level of sales completions continues to remain robust, and once the market finds its rhythm again, price growth is set to stabilise.
‘As buyer interest returns to the market over the coming months I think the outlook will be a lot brighter than predicted. The market has weathered uncertainty in 2017 and fared much better than many believed it would, so I don’t think the market slowdown over the year ahead will be as exaggerated as some are making it out to be,’ he said.
It could mean more choice for buyers, according to Jeremy Duncombe, director of the Legal and General Mortgage Club. ‘Year on year house price growth is now far more in line with wage inflation and, coupled with low mortgage rates, sets the market on a strong footing for 2018,’ he said.
‘House price inflation looks likely to hold steady in the short term, which will give first time buyers a greater chance of stepping onto the property ladder. With thousands of mortgage products now available, anyone who is unsure of where to begin should get in touch with a mortgage broker for advice,’ he added.