Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments:
“The report issued by the Nationwide this morning is based on lending for house purchases at post survey approvals stage, which therefore provides us with a reliable ‘bellwether’ of the UK housing market in November from one of the country’s largest mortgage lenders.
Despite the interest rate rise at the beginning of last month, house price growth year on year remained stable at 2.5%, with a slight month on month increase of 0.1%. This means that annual house price growth has remained within the 2% to 4% range that was forecasted at the beginning of this year, with the market performing to expectations, overall although some regions have fared better than others over the last 12 months, which have smoothed out the headline figures.
This initial picture suggests that the interest rate at the beginning of November did nothing to hamper consumer confidence, partly because it was so well signposted in the preceding months, but also due to the fact that the majority of those moving home are doing so mostly due to individual circumstances, rather than as an arbitrary decision to trade up or as a discretionary move. For these buyers, their purchase is a longer term decision to buy a home, rather than a shorter term decision to purchase ‘an investment to live in’.
What’s interesting is that both the OBR and Nationwide report both suggest that the change in SDLT for First Time Buyers is as likely to benefit existing homeowners as it is those buying their first property. The thinking behind this is that, with the impetus of the stamp duty exemption driving demand for properties up to the £300,000 price point outside of London and £500,000 inside London, it may encourage previous first time buyers to become ‘second steppers’ and put their home on the market, and perhaps see a slight premium on their selling price around the exemption thresholds. Of course, the converse effect may also prove to be true, which is to say that any properties outside of London currently on the market at just over the exemption threshold, for example £315,000 or £325,000 will now struggle to sell at that level, with a similar effect on properties in London, for example currently marketed at £525,000. Of course, we’ll need to see a minimum of six months’ data to see any pattern emerging, and if indeed there is any discernible difference in both transaction volumes and pricing levels as a result.
What today’s report does support, however, is that the market overall is holding steady as we approach the end of the year, and regardless of the current economic and political situation, it’s quite possible that we’ll see a continuation of the current market conditions as we enter 2018, which would get the new year off to a sound start.”