UK property prices have recorded their first fall in monthly terms since shortly after June’s Brexit vote, according to Halifax.
Halifax has published its latest house price index for the month of January revealing that there was a monthly fall in prices for January, although this would seem a seasonal blip as both annually and quarterly the market remains in good health.
House prices in January fell by 0.9% compared with the previous month, but have increased by 2.4% over the last three months and are 5.7% higher compared with the corresponding period last year.
The mortgage lender said that the average price of a residential property now stands at £220,260 and the indications are that a shortage of properties for sale and low levels of housebuilding may place upward pressure on house prices moving forward, although any growth will be dampened by slower economic growth and greater pressure on spending power.
Martin Ellis, Halifax housing economist, said: “UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding, and exceptionally low interest rates. These factors are unlikely to change materially during 2017.
“Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Rob Weaver, director of investments at property crowdfunding platform Property Partner, agrees that despite a slight dip in January, the trajectory for house prices over the long-term looks more likely to be upwards.
He said: “Seasoned investors will know that it’s essential to take a long term view on the property market, and monthly or even quarterly fluctuations should not blur the bigger picture.
“Property prices have been remarkably stable even with multiple tax changes and the spectre of Brexit. The harsh reality for those trying to buy is that there’s a critical shortage in supply, which is underpinning the market.
“Ultra-low interest rates is also helping to stimulate demand from first-time buyers or those hoping to move up the ladder.”
Founder and CEO of eMoov.co.uk, Russell Quirk, concurred: “January is always a lethargic month for UK property as a result of the Christmas break and so any fall in house prices at this time of year should be taken with a pinch of salt, rather than a handful of panic.
“Mortgage approvals have continued to increase and demand remains woefully low, so it is likely that come this time next month, prices will be on the up again across the board and this monthly drop will have righted itself.”
Although there is steady momentum in the housing market, Tarlochan Garcha, CEO at peer-to-peer property lending platform, Kuflink, was keen to point out that the days of double-digit price rises are gone.
“While the market fundamentals are robust enough to drive growth this year, progress will be sedate,” he said. “But while mortgage rates remain low, and the labour market strong, buyers aren’t going to disappear into the ether.”
He continued: “Serious buyers are price sensitive, yet committed. Prices are being supported by the reckless imbalance between demand and supply, but deals are being done on decently priced quality homes.
“The next few months will be crucial to set the tone for the year, as we enter peak buying season. For now, there’s every reason to feel cautiously optimistic about 2017.”