Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Recent figures for the UK’s housing market show prices holding up. The latest housing report from Halifax and IHS Markit shows a significant monthly increase in house prices across the UK; up 1.5% in March, significantly higher than the 0.4% expected by analysts.
Halifax House Price Inflation
Source: IHS Markit & Halifax, 31 March 2018.
Supportive interest rates and government incentives, such as Lifetime and Help-to-Buy ISAs, are still in place but data released by the Bank of England revealed mortgage approvals fell 4.8% in February. This is happening at a time when we have seen a squeeze on real incomes, with wage growth stagnant and inflation rising.
Looking ahead, an expected pick-up in wages is looming (shown in our earlier table at the start of this report). This pick up is occurring at the same time inflation appears to be peaking. If wages continue to grow as inflation is falling, this higher disposable income will support demand for new mortgages.
Halifax is expecting around 2% growth in house price inflation for 2018. So, with wage inflation expected to be 2.8%, while this will not rapidly improve affordability, it will at least not make matters worse for those looking for their first home.