On any other day of the week the UK Guardian is – with some justification – complaining about a housing crisis, with millions of young people priced-out of ever owning – or even renting – a decent home. Now, however, it seems to be treating with alarm news that prices are stagnating. ‘UK house prices take pre-Brexit hit, says Nationwide’ declared a headline this week – followed by news that house prices have, in fact, risen by 0.5 per cent over the past 12 months. That is a lot lower than we have become used to in recent decades, but isn’t it a good thing if rampant house price inflation has come to a halt? And is it really connected with Brexit?
The housing market – outside London – never returned to the mania of pre-2008. Prices, and volumes of sales, have recovered but remained subdued ever since that crisis. They have slowed because they couldn’t keep galloping up at 10 per cent a year – at least not now there is a little more restraint in mortgage-lending. Moreover, much of the appeal of buy-to-let, which drove the market for two decades, has been eroded by recent changes in taxation – and indeed was designed specifically to trim house price inflation.
Yet there is no sign of a correction in the housing market, either. There are few reports of people slashing their prices. If new mortgage approvals were a little down last month, that news is balanced by the continued confidence of house-builders. While IHS Markit detects a slowdown in the growth of construction activity, November saw an especially high total of 15,155 new homes being registered by the NHBC (National House Building Council) – which issues warranties on new homes. This is an indicator which tends to lead the government’s own housebuilding statistics because builders register properties in advance of building them.
Why should Brexit lead to a housing collapse? If your kids are crushed together in one bedroom you are going to want to move to a larger home. Whether you think you can afford it or not is more likely to be influenced by the contents of your pay cheque, your confidence of keeping your job and the ease of getting a mortgage, not whether you will be able to continue to walk through the blue channel at an airport. Real wage growth is growing, and unemployment is at a 45 year low. Those ought to be pretty bullish indicators for the housing market.