House prices edged up last month but the property market remains subdued as home hunters worry about Brexit, said Nationwide Building Society.
Annual house price inflation rose from 1.6 per cent to 1.9 per cent, in November, but remains below both the official consumer prices inflation figure, at 2.4 per cent, and wage increases at 3 per cent.
The figures come in the wake of the Bank of England revealing stress tests this week, under which it posited a worst case scenario for banks of a 30 per cent fall in house prices triggered by a chaotic no deal Brexit.
In contrast, Nationwide indicated that if a Brexit deal is voted through it could lift the property market.
November saw a slight uptick in annual house price inflation, Nationwide Building Society said
‘If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year’, said Nationwide’s chief economist Robert Gardner.
Britain’s biggest building society said house prices rose 0.3 per cent in the month of November.
However, the gain was down to the statistical manipulation involved in seasonal adjustment of the index, as the average property value actually dipped from £214,534 to £214,044.
Low mortgage rates, strong employment and rising wages are bolstering the property market in the face of uncertainty over Brexit, but in-depth figures show that while northern cities and the Midlands are in hot demand, London and the South East are suffering.
Mr Gardner said: ‘Looking forward, much will depend on how broader economic conditions evolve. In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40-year lows.
House prices had risen rapidly since 2013 but growth has tailed off over the past 18 months
He added: ‘The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead.’
Earlier this week, Bank of England Governor Mark Carney sparked controversy as he revealed its stress test scenario for banks.
The ‘worst case scenario’ published by the Bank for a last-minute no deal, no transition Brexit modelled Britain’s GDP plunging by 8 per cent and a 30 per cent decline in house prices.
The bank reiterated that it did not think this would happen but that it had to plan for the worst case scenario.
Jeremy Leaf, a north London estate agent and former Royal Institution of Chartered Surveyors residential chairman, said the figures were better than expected but most buyers waiting in the wings for a Brexit deal to be finalised were likely to wait until the New Year before acting.
He said: ‘They come on the back of encouraging mortgage approval and transaction figures yesterday which show, once again, that realistic buyers and sellers are taking advantage of very low mortgage rates and shrugging off Brexit concerns.
‘These seem to be weighing more heavily on buyers in London and the South East, as the old north/south divide is turned on its head with the property market in the capital and its environs now dragging down the rest of the country.
‘Looking forward, we don’t expect any major changes in the period leading up to Christmas unless our departure from the EU is finalised more clearly one way or the other but there is no doubt we are finding there is considerable pent-up demand awaiting more settled times.’