One of the biggest stories post-Brexit is how the housing market has proven to be more resilient than anyone could have imagined. Even setting aside the doom and gloom reports of falls in house values and a struggling economy (neither of which came to fruition), house prices have continued to surprise many.
Nationwide has released figures that show house prices are still on the up. February saw an increase of 0.6% over the month before. This was three times the 0.2% prediction calculated by analysts prior to the release of the figures. Following a 0.8% increase in December and a further 0.2% increase in January, house prices are clearly still on the up.
Predictions year-on-year were also off
Given those figures, it would not be a surprise to discover the year-on-year predictions for house prices were also out. Analysts broadly expected an improvement of 4.1% over the same month last year, when the actual figure was 4.5%. This figure also proved better than January’s start to the year, when an increase of 4.3% was recorded.
Are low interest rates part of the picture?
Yes, it looks like low interest rates are continuing to drive the rises in house prices. With more people looking to get mortgages to get onto the housing ladder or to move home, demand is steady. This is pushing house prices further north than might otherwise have been the case.
The rises mean the average UK house price now stands at £205,846. However, despite this encouraging start to the year, many still believe 2017 could prove challenging for the housing market. With that said, experts at Nationwide still believe “a small rise in house prices” is more likely to be the outcome this year than a drop of any size.
Different areas see different results
You would expect different parts of the country to see differences in the way house prices are moving, and this was borne out by Land Registry data. Most of the areas seeing sharp rises in prices are in the south-east, although other pockets exist where prices have also grown significantly.
Different sources indicate predicted gains of between 2% and 3%. It remains to be seen how accurate those predictions are. With Brexit seemingly about to be triggered by the Government, uncertainty over negotiations, and what may await us in the future, will all likely have an effect. This is likely to be seen over the year and through the wider economy, too.
For now, low interest rates are persisting, making mortgages more attractive for many. If this continues, we are likely to see some encouraging results in house prices, too. However, if people hang fire, waiting to see how the Brexit negotiations turn out, this could put a dampener on the market. Confidence is playing a large role here, and it is a bigger role than some may think. Homeowners will hope prices continue to rise, but for how long, we cannot tell. Watch this space.