The usual reasons trotted out include uncertainty ahead of the general election. Never say never, but the only uncertainty we can see is by what margin Mrs May wins. Another supposed reason is the unsure climate brought on by the UK's decision to leave the EU. If this is true, then many people won't be moving at all because the whole process of leaving the EU could take 10 years to complete. Another reason cited is the change in stamp duty. This is odd because on a purchase price of under £500,000, the new sliding scale means that stamp duty is either the same or less, depending on the exact purchase price.
Are there other factors at work? It's certainly true that price/earnings multiples are looking a little stretched at 6.1 against a long-term average of 4.3, although still below the 6.4 peak touched in 2007. And while mortgage rates remain at a record low, there is always a worry that they could rise and make some borrowers struggle with repayments, although this should be built in to the lending criteria employed by banks. Besides which, a majority of mortgages are locked in on a fixed-rate basis. Some also argue that with average earnings failing to keep pace with inflation, spending budgets could be squeezed.
Now let's take a look at the numbers. According to the Nationwide, house prices in April showed their second consecutive decline, taking annual house price inflation to 2.6 per cent, its lowest for nearly four years. The same fall for April was recorded by the Halifax, although its annual rate was higher at 3.8 per cent.
The truth is that there is no simple answer. Generally acknowledged as the trend setter, prices in prime central London fell 7 per cent in 2016, down 13 per cent from the 2014 peak. But with lower selling prices, property transaction levels have just notched up the third consecutive quarterly rise, suggesting that prices may have bottomed out. It pays to be cautious, however, because sterling's weakness has certainly encouraged overseas investors to dip their toes into the market.
Back in the real world, the regional variations make interesting reading. In a survey conducted by the Royal Institution of Chartered Surveyors, trading volume in Yorkshire and Humberside is being held back by a lack of new housing stock coming on to the market, which in some cases has led to selling prices exceeding expectations. And in East Anglia, the supply shortage looks again to be underpinning prices, with quality houses still keenly sought-after. The same story can be found across most regions, and the common theme is a lack of supply. It is not the case of potential buyers being put off by any particular factor; it is the lack of supply coming on to the market. People looking to upgrade their home or looking to move to a new area appear to be getting more selective. Taking a look at the comparison websites tends to bear this out, with some properties remaining unsold for a year despite the asking price being reduced.
This is producing a situation of contrasting influences. On the one hand, buyers are not prepared - or cannot afford - to bid up for properties, which should limit price inflation. But at the same time the lack of new supply of attractive homes is underpinning values.
So what is the block in the system? The block is the lack of people putting their houses on the market. This is complex because at the lower end of the pricing structure potential sellers are thinking twice about moving up the housing ladder in terms of values because they are worried about how Brexit will affect interest rates and the economy in general. If you are made redundant, the last thing you want is to be stretched on repayment obligations. The other factor is that older people, who are sitting on a vast amount of wealth in terms of property value, simply aren't moving. Retired couples with no mortgages, good health and a decent pension income have no need to move on or downsize. Maybe it's time for the government to make it attractive for them to do so.
