House prices edged ahead in August according to Halifax, with the property market showing a “degree of resilience” despite intense political uncertainty.
Halifax said average prices rose by 0.3% month-on-month, taking the annual rate of house price inflation to 1.8%. It was the second month of rising prices after four months in which they had been either flat or falling.
Meanwhile, one of the leading skyscraper developers in London, Berkeley, said it had enjoyed a period of robust market conditions in the capital and the south-east of England. It is currently building London’s second-tallest residential development, the 68-storey South Quay Plaza in Canary Wharf, where apartment prices rise to above £2m.
Brexit-induced uncertainty is seen as the principal cause of falling prices in the London market, where according to most indices prices have gone into reverse over the past year.
But in a trading update, Berkeley said that “pricing has remained stable and … there is good underlying demand for new homes” despite what it described as “uncertainty in the macro-political and economic environment”.
According to Halifax, the average price for a new home in the UK has risen to £233,541, up by nearly £4,000 since the same time last year. It said the property market is supported by strong employment levels and the continued shortage of houses for sale.
Halifax managing director Russell Galley said: “While ongoing economic uncertainty continues to weigh on consumer sentiment – with evidence of both buyers and sellers exercising some caution – a number of important underlying factors such as affordability and employment remain strong.
“Although the housing market will undoubtedly be influenced by events in the wider economy, it continues to show a degree of resilience for the time being. We should also not lose sight of the fact that the single biggest driver of both prices and activity over the longer-term remains the dearth of available properties to meet demand from buyers.”
Earlier this week, Barratt Homes posted a record £910m profit despite a tough property market.The company has benefited from the UK government’s help-to-buy scheme, which accounted for 40% of sales but has been widely criticised for inflating prices.
Barratt also confirmed that the new-build housing market has been remarkably resilient, despite the increasing threat of a no-deal Brexit, adding that there had been no reduction in first-time buyer appetite.
But some property experts are less sanguine about the outlook, saying that the political upheavals of the last week will knock confidence.
Guy Harrington of property lender Glenhawk said: “Although [the Halifax figures are] relatively positive, demonstrating the ongoing appeal of homeownership in the UK, the volatile political events of this week, which show little sign of abating, may soon change the sentiment, especially if predictions of an economic downturn are realised.”
One support for buyers is likely to be renewed falls in mortgage interest rates. Dramatic movements in gilt yields, which tumbled to record lows this week – with interest rates dropping to just 0.4% on 10-year bonds – are feeding through to lower fixed-rate mortgage deals.
This week HSBC suggested it was making an extra £35bn available for lending in the UK residential mortgage market. Two-year fixes are now widely available at rates of around 1.25%, while five-year deals have fallen to below 1.7%.