Summary

Annual price falls in London were reported for the first time since Q3 2009, at -0.6% according to Nationwide. The East Midlands saw the highest regional house price growth in the year to Q3 2017, with growth of 5.1%. At a national level monthly growth moved back into positive territory through September at 0.2%, with annual growth now sitting at 2.0%.

Despite the indices showing a slowdown, surveyors responding to the August RICS sentiment survey were more positive about house price growth. This is the first improvement in sentiment for nine months. The numbers of surveyors reporting rising and falling numbers of new instructions was broadly in balance for the first time since before the EU Referendum. More surveyors reported rising numbers of new instructions in August than in any of the previous 18 months. Instructions have now moved slightly ahead of enquiries in the survey. If this trend continues we may see downward pressure on house price growth.

Theresa May’s Florence speech restored some confidence in the progress of Brexit talks. The conciliatory tone prompted Oxford Economics to amend the likelihood of agreeing transitional arrangements from 60% to 70%, raising the overall likelihood of a transition agreement followed by an FTA to 35%. Meanwhile members of the MPC, including the Governor, Mark Carney, have signalled that a rate hike before the end of the year is likely. Although some news reports suggest mortgage rates are beginning to rise pre-emptively this has yet to filter through into the data. Any base rate increase is likely to be modest but adjustments to mortgage rates may dampen price growth in the coming months.