Which overused metaphor better suits the current state of the property market. Dodging a bullet... or the calm before the storm?
Today’s data from the Halifax certainly suggests that property owners will escape with a far smaller hit to their bricks and mortar wealth than most were predicting at the start of the year.
Average prices popped up 0.5% in November, the second consecutive monthly rise, and are now down just one per cent year on year. Even in London, prices are just 3.8% lower.
One swallow does not a summer make — to continue in cliche mode — but that is two sets of data from two of the leading indices. Fellow lender Nationwide shows a similar pattern in its numbers.
Economists will point to inflation and argue that the falls in real terms are much bigger. But no house buyer or seller thinks that way — well, perhaps economists do — the ups and downs are almost always calibrated in terms of cold hard nominal cash.
So why have prices remained so resilient?
One factor is the very slow burn of fixed mortgage rates needing to be refinanced.
That gives the vast majority of homeowners time to plan ahead and prepare for the higher bills. In the mean time, market rates have subsided more quickly than expected.
Average two-year fixes peaked at 6.86% in July. Today they stand at just a whisker above 6%, according to Moneyfacts. Five-year fixes topped out in August at 6.37% and are now down to 5.63%. Both those figures are well above pre-mini Budget lows but the direction of travel now appears set as inflation responds to the Bank of England’s medicine.
So property prices remain in remarkably robust shape all things considered. Whether that is a bad or a good thing is another discussion.
And here real prices are relevant. If property does flatline for a prolonged period and wages rise, existing homeowners continue to feel financially secure — and spend accordingly — and wannabe buyers find the ladder coming within reach at last.
Win, win, to coin another phrase