autho Brexit-fuelled inflation hinders house prices - DBS

Brexit-fuelled inflation hinders house prices

August 30, 2017Property

Brexit-fuelled inflation has began to have an effect on the housing market as house price growth slowed to 2.1% in August, from 2.9% in July.

Property values fell to an average of £210,495, the first month-on-month fall since May. Although prices are still projected to rise by 2% across 2017 as a whole.

The number of approved mortgages for house purchases also fell to 65,000 in June, a nine-month low.

This has caused surprise among some, as British unemployment levels are at 4.4%, the lowest levels since the 1970s. There have also been an extra 125,000 jobs created in the three months leading up to June 2017.

However, this does not take into account the greater number of people in education, in part-time work, and in lower-income roles in the workplace.

This means that although the labour market makes for more positive reading, it does not necessarily mean a rise in property purchasing power across the nation.

Inflation fears

In fact, this could be quite the opposite when we consider the wider economic performance of the UK currently.

Brexit has been a major contributing factor to the UK economy slowing and poor future projections not giving a positive outlook for improved conditions.

Inflation has risen as a result, and wages have failed to catch up, meaning that households are under greater pressure when it comes to money.

House prices will still rise

Despite the short-term negative outlook for the housing market, Nationwide still expects that house prices will rise by 2% in 2017, thanks to a decrease in the supply of new homes.

House prices have risen by 12% since 2007.

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