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Amid all the uncertainty over Brexit what’s happening to house prices? Is now a good time to buy or sell?

“He uses statistics in the same way that a drunk uses lamp-posts – for support rather than for illumination” Andrew Lang, Scottish post and novelist 1844-1912

The north-south divide in property values is starting to narrow, latest figures show. But markets across the country are fragmented. A quick glance in an estate agent’s window shows sale prices for similar properties vary dramatically between neighbouring towns and villages – even streets. Wherever you live, it comes down to getting the price right.

Mark Shipside, director of Rightmove property portal and housing market analyst, said: “The housing market fundamentals remain largely sound in many parts of the country but the current political climate means that the crucial ingredient of confidence has been impaired and this is causing some potential buyers and sellers to hesitate. With record employment, low interest rates and good mortgage availability, buyers have a lot in their favour apart from a lack of political certainty. It could be a good opportunity to negotiate a bargain.”

Measuring the market

The Royal Institution of Charters Surveyors’ (RICS) latest residential market survey (June) suggests average prices have risen in the past three months in the North, North-West, West Midland, East Midlands, Scotland, Northern Ireland and Wales. But they have fallen in London, South East, East of England, South-West, East Midlands, Yorkshire & the Humber.

Meanwhile, the only areas where newly agreed sales have risen are the South-West and the North of England. Everywhere else the market remains depressed.

James Brown, a surveyor with Norman F Brown in Richmond, commented: “The sales market has been noticeably quieter this month on the back of political and Brexit uncertainly being back on the front pages.” Richard Franklin, a surveyor at Franklin Gallimore in Worcestershire, agreed economic uncertainty is a key factor, but he added a “swathe of overpriced stock is clogging up the market with few aspirational movers.” Over-optimistic valuations may explain the results of the RICS survey, showing prices are rising across the UK but agreed sales in only two regions.

Jason Coombes, a surveyor at Cottons Chartered Surveyors in Birmingham is more upbeat, saying: “I feel that Brexit fatigue is starting to set in with both buyers and vendors showing signs of being fed up with uncertainty wanting to commit to purchase.” Craig Pilgrim, a surveyor at Pilgrim Bond in Hungerford added: “Uncertainly over Brexit still exists although some green shoots are appearing.”

Land Registry

The RICS survey is based on responses from the organisation’s members, measuring the mood of the housing market rather than the actual prices in different locations. Surveyors answer questions on property values in their area and how many people are putting their homes up for sale, for example. In contrast, the UK House Price Index, the Bank of England’s preferred measure of house price inflation, is based on the sale prices of homes. It uses hard data on property transactions from the Land Registry and the Office for National Statistics. In May – the latest figures available – the average price nationally was £229,431, which is 1.2% up on the same month of 2018.  It is noticeably higher in some regions and lower in others. Over the same period, inflation – which erodes your purchasing power - is up 1.9%. The government’s policy of quantitative easing – or printing money – causes inflation and potentially house prices to increase.

Nationwide and Halifax

Every month there is an outpouring of new data on the ups and downs of the property market. The statistics should shed light but can be contradictory and confusing. Halifax’s latest numbers, for example, suggest a strong recovery in the market. The index, which is based on the lender’s mortgage valuation, showed a year-on-year price increase of 5.7% to £237,837 in June. Russell Galley, Halifax’s managing director, said the market was “remarkably resilient” despite political and economic uncertainty. But its findings are completely out of step with both the UK House Price Index and other building society figures.  Nationwide compiles its own index based on the lender’s mortgage data using applications for loans that have been approved. The Nationwide UK house price index shows the average house price in June was £216,515, which is 0.5% higher than a year ago.

Rightmove & Zoopla

Property portal Rightmove has compiled its own listings, which account for 90 per cent of all properties for sale. The index is based on the asking price (often over-optimistic) at which properties are marketed. The July index show the average asking price of a property coming to market fell by 0.2% (£656) the first monthly fall to date in 2019. Key metrics indicate a buyers’ market in the second half of 2019, says Rightmove.

Meanwhile, property website Zoopla, has compiled a cities house price index based on sales prices in the largest 20 cities in the UK. In May – the latest figures available - Liverpool is the leader of the pack with an annual price increase of 5%, followed by Belfast at 4.6% and Nottingham and Leicester both at 4.5%. At the opposite end of the spectrum, property values in Aberdeen are now 4.2% lower than they were in May last year while prices have fallen 0.5% in Cambridge and 0.4% in London. Zoopla predicts house price inflation will continue to slow across southern England.

Will there be a Boris bounce?

Could new Prime Minister Boris Johnson turn the fortunes of the UK property market around? Will year-on-year comparison figures start to improve if the UK withdraws from the EU on October 31 with or without a deal? Or will leaving the EU trigger a slide in property prices?  Earlier this month (July), the Office for Budget Responsibility predicted that a no-deal Brexit would lead to house prices falling by almost 10% by mid-2021. Last year, Bank of England governor Mark Carney warned that crashing out of the EU without a deal could sent property prices tumbling by a third.

It’s impossible to say to what extent Brexit has – or will - influence house price figures. Some experts argue the house price slowdown is simply a long overdue correction, which could help buyers who have been priced out of the market in recent years. David Blake, Which? mortgage expert, said: “Recent price drops in some regions means that it’s becoming more of a buyers’ market, so you may be able to get a good deal. Besides, buying a property should generally be regarded as long-term investment and even if there is a short-term drop, house prices will stabilise in future.”

Other factors also affect house prices.  If the Bank of England reduces the interest rate, it becomes cheaper to get a larger mortgage, pushing up house prices. However, the current base rate is very low at 0.75% (up from 0.5% in August 2018) and expected to increase rather than decrease, but much depends on the outcome of Brexit. Finally, the price of food is an often-overlooked factor. If the price of food increases substantially, people will have less money to spend on housing – causing prices to fall.

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