However, according to the Nationwide House Price Index, signs of buyer demand suggest Brexit uncertainty is passing and buyers are keen to lock in to low fixed rates.
UK house prices increased by 0.1% in November, after taking account of seasonal factors.
The growth rate is down from 4.6% in October. Despite this, Nationwide’s chief economist Robert Gardner said growth is still in line with the rates prevailing since 2015.
“There are some signs that, despite the uncertain economic outlook, demand conditions have strengthened a little in recent months, reflecting the impact of solid labour market conditions and historically low borrowing costs,” said Gardner.
“Mortgage approvals increased in October, and surveyors report that new buyer enquiries have increased modestly. The relatively low number of homes on the market and modest rates of housing construction are likely to keep the demand/supply balance fairly tight in the quarters ahead, even if economic conditions weaken, as most forecasters expect.”
He cited Council of Mortgage Lender figures showing that more than 90% of new mortgages contracted in the last 12 months are on fixed rates, rising to 95% for the first-time buyer population.
Founder and chief executive of eMoov.co.uk Russell Quirk said the UK property market has weathered a difficult year, with prices maintaining an upward trend. However, buyer interest has come at a seasonally quiet point in the cycle.
“It would seem that UK buyers are setting a tentative first foot out of their post-Brexit foxholes with a modest increase in new buyer enquiries just as home sellers, who have remained prominent in the market all year, decide to avoid this seasonal property cold snap and go into hibernation until 2017,” he said.
He added: “The market will now see stock levels plummet as many choose to put their sale on hold over the festive season and resume their marketing in the New Year. We expect this might see a drop in prices at the last hurdle for 2016 in the December index, although this will be far from unusual and nothing to panic over.”
Jeremy Leaf, north London estate agent and former RICS residential chairman, said modest house price increases are due mainly to the continuing shortage of supply.
“Once again we are finding that those who are prepared to recognise the new realism in the market for buying and selling are still getting on with transactions,” he said.
“Fixed-rate mortgages are proving particularly popular in anticipation of almost inevitable rate hikes next year. The fact that almost all first-time buyers taking on high loan-to-value mortgages are opting for a fixed rate is good news as it will give them financial security when borrowing costs start to rise.”
Jonathan Hopper, managing director of Garrington Property Finders, added that buyers seem to be moving past Brexit uncertainty.
“With Britain close to full employment and mortgage costs at a record low, the building blocks for borrowing are there,” he said.
“Many would-be buyers who had been holding off until the referendum dust settled have given up trying to second guess the impact of Brexit on their finances – and are instead focusing on the property market’s strong fundamentals and taking the plunge.”
In many areas it remains a buyer’s market, Hopper added, with pragmatic sellers increasingly willing to trim asking prices. “The result has been to shift the balance of power firmly into the hands of buyers. With price cuts available for those who negotiate hard, growing numbers of buyers are deciding that now is the time to act.”