Halifax sees buoyancy returning to the UK housing market

In a bizarre turnaround, leading mortgage lender Halifax has reported that “some buoyancy” seems to be returning to the UK housing market. The average cost of a UK home increased by 1.1% between July and August and now stands at £222,293. The annual figure comes in at 2.6% although the quarter by quarter rise is a more modest 0.1% – but at least this is still in positive ground. So, is the UK housing market now returning to some kind of normality?

Differing views

Just last month we saw Nationwide report a fall in UK house prices although it is worth reminding ourselves that the two companies calculate their figures in a slightly different manner. That said, it is a little confusing to see one major lender suggesting house prices are recovering while another indicating a continuing, albeit modest, slide in prices.

Employment market

The Halifax believe the relatively high level of employment in the UK at the moment is having an impact upon house prices. When you also take into account the extremely low base rates, and by definition mortgage rates, we have relatively high employment and relatively low finance costs. In the short-term these two elements are perhaps a “match made in heaven” although as we have mentioned on numerous occasions, there will be some challenging times ahead as UK base rates eventually start to return back to some kind of normality.

Shortage of suitable properties

Most experts believe that UK house prices would be a little lower if it was not for the shortage of suitable properties on the market. This has been an issue for many years now and while the number of buyers has fallen in recent times, the number of properties for sale has probably fallen by a greater extent. As a result, this has maintained the relative competition among buyers for properties on the market hence average UK house prices have perhaps outperformed expectations.

There’s no real reason why we should see a deluge of new properties on the market with continued economic uncertainty and relatively high moving costs due to stamp duty changes. A distinct lack of first-time buyers has also taken away some liquidity from the UK housing market, giving fewer people the option to upsize as they would traditionally be selling to new market entrants.

Is it simply an issue of supply and demand?

There is no doubt that the supply and demand balance of recent times has predominantly tipped in favour of maintaining property prices, as opposed to putting them under pressure. That said, there are also many other issues to consider. The expected uncertainty surrounding Brexit has been nowhere near as great as many forecasted but in relative terms we are still in the early days of the eventual exit from the European Union.

At this moment in time all parties are playing “hardball” with a likely middleground solution to be reached in the medium to long term. While markets would prefer a relatively quick resolution to this problem this is highly unlikely bearing in mind the number of parties involved and their biased agendas.


It is encouraging to see Halifax reporting an increase in the average cost of a UK home but it is disappointing to see a similar Nationwide report at odds with this new emerging trend. Many people have failed to recognise the relatively high levels of employment in the UK with the cloud of Brexit hanging over every financial market. There is no doubt this has had a significant impact upon UK house prices in the short term although there are many long-term challenges facing the UK government.

Has the modest downtrend of recent times come to an end? Probably not, but UK house prices are unlikely to fall off the edge of a cliff as many Remainers continue to suggest.

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