UK house prices accelerated in February, but experts warn it won’t last
Figures published by Nationwide recently showed a growth of 0.6 per cent between January and February, working out an average of £600.
In annual terms, prices were 4.5 per cent higher, a stronger rise than January’s 4.3 per cent which was the weakest increase since November 2015. Nationwide economist Robert Gardner said Britain’s economy was likely to slow this year as the country prepares to leave the European Union and inflation eats into consumers’ spending power.
He went on to say a small rise in house prices of around 2% is more likely than a decline over the course of 2017, as low mortgages rates and dearth of homes on the market continues to support prices. “Recent data suggest that the UK economy has continued to perform relatively strongly. The outlook is uncertain, but we, along with most other forecasters, expect the UK economy to show through 2017 as heightened uncertainty weighs on business investment and hiring. Consumer spending, a key engine of growth in recent quarters, is also likely to be impacted by rising inflation in the months ahead as a result of the weaker pound,” he said.
According to their research, cash transactions have increased significantly. Mr Gardner said cash sales rose to a peak of 38.9% of transaction in the first quarter of 2016 as buy-to-let investors rushed to beat a stamp duty hike imposed last April.
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB) added: “It’s interesting to note that Nationwide have mentioned the amount of cash purchasers in the context of the report, with their figures showing that 35% of transactions are now cash funded, rather than purchased via a mortgage.
“This is potentially a result of those who are older downsizing to lower value properties, therefore having the wherewithal to pay off their mortgage, and is potentially a good ‘health check’ indicator in terms of confidence, as consumers continue to keep their cash in bricks and mortar rather than other asset classes.
“Overall, it’s still too early to tell if the market will blossom in the Spring, but if the figures continue as they have this month it’s possible that we’ll see a flat and calm picture rather than a stormy outlook as we move towards what is normally one of the busier times of the year.”
Written by: The Team | On: March 1, 2017