The rate at which house prices grew annually, softened from 2.5% in July to 2.0% in August, as month-on-month average house prices declined by 0.5%. What does this mean for the housing market and those with mortgages?
Continuing uncertainty in the economy and a broadening concern over the direction of Brexit is perhaps creating some distress in the labour market, which is impacting the trend on house price growth. Typically, the first property market to feel the impact of economic uncertainty is the London property market, with a knock-on effect felt in other locations afterwards. House price growth remains relatively steady around the country, with some growth in the Midlands and East Anglia, especially. This is perhaps largely because these areas remain relatively good value for property ownership, and lifestyles are changing as people move outside the capital. What makes the Midlands and East Anglia a good option is their proximity to London and the option of commuting. And with continuing development of land for new housing in the Midlands and around the country, there is a growing choice of locations and property types available.
The housing market seems to be entering a period of stability, where house price growth is more in line with inflation and wage growth. That perhaps puts a little more pressure on homeowners to seek more competitive deals on products like mortgages. With interest rates forecast to rise a little towards a normalisation of around 1%, now is still a good time to seek a low-interest mortgage deal, perhaps with a fixed-term element.