The latest index report by the building society Nationwide has revealed an average property price rise of 0.2% for January. That’s a total increase of 4.3% since January in 2016, leaving the current average price of a home in the United Kingdom at £205,240. However, the lack of long-term stability and the economic uncertainty surrounding the imminent Brexit means that the outlook is not as rosy as one might have hoped.
Certainly, the UK economy has not quite suffered the disaster many predicted in the wake of the vote to leave the European Union, but some industry experts are still fearful that there could yet be a serious downturn.
Experts Forecast Economic Uncertainty
Robert Gardner is the Chief Economist of the Nationwide building society and he believes that there is likely to be further small increases in the average house price, though the economy itself could slow down as inflation takes its toll.
Mr Gardner said:
“Recent data indicates that the economy did not slow in the second half of 2016 and the unemployment rate remained stable at an eleven year low in the three months to November. However, there are tentative signs that conditions may be about to soften. Employment growth has moderated and while wage growth has edged up in recent months, in real terms, earnings growth has already slowed. With inflation set to rise further in the months ahead as a result of the weaker pound, real wages are likely to come under further pressure. Employment growth is also likely to continue to moderate, should the economy slow as most forecasters expect.”
He also agreed with the forecasters who have predicted a significant slowing down of the UK economy throughout 2017, saying:
“On balance, we agree with the consensus view that the economy is likely to slow through 2017 as the squeeze on household budgets intensifies and heightened uncertainty weighs on business investment and hiring. Nevertheless, we continue to believe that a small rise in [average] house price of around two percent is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices.”
A Stable Start to the Year
While the uncertainty regarding the economic consequences of Brexit loom large over the UK housing market like a grey cloud, the stable start to 2017 we have experienced is a respite from much of the doom and gloom that has been predicted by many to follow the country’s exit from the EU. It had been predicted to be much worse already, so any rise in the average house price is a welcome bonus.
