If we look at the existing housing stock and not the new build market, enquiries from potential buyers have been steadily rising in the last few months of 2016. But the problem here is that there has been no sign of any corresponding increase in the number of sellers. For the most part, existing homeowners seem happy to sit on their hands. In fact, sales instructions have risen in just five of the last 36 months, which leaves the number of homes for sale on the market close to the lowest level on record. The contrast between the two can be partly explained by the fact that potential buyers still want to get on the housing ladder, but existing owners are pretty wary of moving higher up the ladder by selling their existing home and taking on a bigger mortgage; something borne out by the fact that mortgage approvals have remained pretty static. It may also be that the increase in prices has curtailed sellers looking to move up the ladder simply because they cannot afford a bigger mortgage. Sentiment is also affected by employment trends, and while average earnings have been outstripping inflation, that's unlikely to last, or at least the gap will close as inflation rises. Meanwhile, employment growth has slowed to just over 1 per cent year on year, around half the pace recorded six months earlier.
Through all of this, the one prevailing indicator is that house price inflation is slowing, but with demand continuing to outstrip the supply of houses on the market, there is unlikely to be any real fall in values, apart from the frothy end of the London housing market.