The growth in property prices stalled in July, latest data from the Royal Institution of Chartered Surveyors (Rics) revealed today showed.
While some analysts think that the overall market will grow over time, others point out that homeownership woes will persist this year.
Take a look at what property pundits had to say:
Brexit, taxes and competition from other countries weigh on London’s property market
Berenberg’s senior UK Economist, Kallum Pickering, said: “Since the Lehman-recession, the London property market has served as a safe haven for foreign capital. Strong foreign demand and a booming London economy have driven house prices to 48 per cent above their pre-Lehman peak.
A combination of factors have weighed on London demand over the past year. First, the UK government raised stamp duty on second properties in April 2016. Second, Brexit created risks that were not appropriately reflected in the exceptionally low property yields at the time of the Brexit vote, triggering a re-pricing. Third, as the global economy improved over the past year, London has faced stronger competition from other global cities. While some London homeowners with high levels of debt may reign in their spending if the market corrects, as long as the national economy holds up, London house prices can fall without creating major systemic risks.
Flat market isn’t all bad news
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “It should also be remembered that, where reported, a slight lull in activity in July is seasonally expected, and therefore no cause for alarm, given that we’re in peak holiday season and many are putting their moving plans on hold to take their hard earned break. This isn’t an indictment on the market – it’s just what happens at this time of year and should be viewed in context.
“The Rics report also suggests a flat market in the coming months, which although at first may seem like a negative statement, taking a pragmatic view this isn’t the worst news in the world. With values currently riding in many areas at above their 2007 market peak, continued growth could see housing spiral to unachievable levels and potentially line the market up for a significant correction. Taking a pragmatic view then, a market which remains flat for the foreseeable future is possibly the best outcome for many.”
Chronic lack of supply is the biggest issue
Richard Sexton, director at e.surv, said: “Sales activity remains flat, despite a slowdown in house price inflation. Through a lack of growth in new buyer enquiries and new instructions, buyers and sellers are evidently taking a cautious approach during times of economic uncertainty.
“Despite this, today’s results should not be viewed as a sign of troubled waters. The whole market has been steadily growing and we have seen increases in mortgage approvals year-on-year, driven by remortgage activity, particularly in the north.”
However, the fundamental issue which remains and prevents a significant advancement in our housing market is a chronic lack of supply. The government must begin to put words into action and address this problem, sooner rather than later, to enable more first-time buyers to step onto the property ladder and increase market fluidity.
Mortage industry remains resilient
Jeremy Duncombe, director, Legal & General Mortgage Club, said: “Uncertainty in the current political and economic landscape might have made some buyers act with caution before investing in a new property. Yet despite the more discouraging views on the housing market, the mortgage industry has actually remained resilient in the face of Brexit negotiations and a minority government.
“In fact, with house prices now rising in line with wage inflation, for many previously struggling first-time buyers the housing market now offers more opportunity to make the first step.
“However, the long-running issue of housing supply remains, and it’s vital that the government continues to find and act on ways to address our limited housing stock to boost housing supply and give more younger buyers a better chance at homeownership.”
The overall market will grow over time
Stephen Wasserman, managing director at West One Loans, said: “Political and economic upheaval, alongside the ongoing supply vs demand issue, is continuing to plague the property market, damping buyer and investor demand. Despite today’s figures painting another downcast picture of activity, the housing market is resilient and we’re optimistic that while we may continue to see a few stutters in due course, the overall market will grow in time. The bridging sector in particular has been flourishing in recent months, as those looking to capitalise on quick sales can do so with the flexibility and speed that this unique type of financing offers, and we expect this trend to continue.”