After almost grinding to a complete halt in January, annual house price growth remained subdued in February, with prices just 0.4% higher than the same time last year, Nationwide’s House Price Index has found.
Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggested that sentiment has softened.
Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “The 2019 housing market clearly hasn’t quite taken off in the way many hoped or expected.
“Although activity is better for some price brackets and property types, buyers and sellers are caught in a dilemma. Are concerns over Brexit outweighing positive improvements in affordability and employment, combined with continuing low borrowing costs?
“The result is inaction for many, other than first-time buyer numbers which remain one good news story as they profit from reduced landlord competition for smaller, lower-priced properties, which will certainly benefit the whole market.
“Looking forward, we are not expecting much change until at least the odds on a Brexit deal shorten and perhaps more encouragement for housing in the forthcoming Spring Statement.”
Robert Gardner, Nationwide’s chief economist, said: “While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.”
“The latest English Housing Survey from the Ministry of Housing, Communities & Local Government (MHCLG) showed a slight rise in the home ownership rate in 2018 to 63.5% (from 62.6% in 2017).”
Gardner added: “The rise in home ownership was driven by an increase in the number of people owning their home with a mortgage, which began to increase again after declining continuously since 2005.
“The number of people owning their own home with a mortgage rose by 5% over the year to 6.9 million, though this is still 20% below the peak recorded in 2000.
“Supportive labour market conditions and a number of policy changes, especially in the regulatory and tax system, have improved the bargaining position of home buyers relative to investors.
“Government schemes, such as Help To Buy equity loan, have also helped support first time buyer numbers. The biggest improvement in home ownership over the past year has been amongst those aged 35-44, helping to reverse some of the decline seen in the last few years.
“Nonetheless, at 57%, the home ownership rate amongst this age group is still well below its 2006 peak of 73%.”
The number of households owning their homes outright remained at a record high of 7.9 million. This figure has increased by 1.2 million over the past decade, almost entirely amongst homeowners aged 65 or above.
Kevin Roberts, director, Legal & General Mortgage Club, added: “Slower house price growth combined with competitive mortgage rates continues to entice buyers, particularly first-timers, who now make up the majority of home purchases bought with a mortgage.
“With their numbers at a 12-year high, government initiatives, such as Help to Buy and Shared Ownership are helping those who may otherwise be unable to step onto the property ladder.
“For borrowers, the influx of innovative solutions has provided more choice than ever before, which for some may seem a little overwhelming. By speaking with a mortgage adviser, borrowers can gain a better understanding of the options available and receive tailored advice that is best suited to their needs.”
Dilpreet Bhagrath, mortgage expert at Trussle, said: “House price growth has remained slow throughout February. With Brexit still at the forefront of minds, many of those hoping to move are reluctant. This will likely have an impact on property price growth.
“While the number of homes coming onto the market has slowed, there are still some good deals to be had, particularly for first-time buyers not in a chain who are able to move quickly. Those who do find their dream home should take into account their current and future personal circumstances and consider opting for a fixed-rate mortgage for the stability of knowing how much they’ll pay each month.”