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UK house price growth has picked up unexpectedly, according to the Halifax. Jeremy Leaf, principal of Jeremy Leaf & Co, told The Guardian and The Telegraph: ‘It is worth remembering that house price growth is being underpinned by a shortage of supply, including house building, rather than strong buyer demand.’ He added in The Times: ‘Fewer transactions are taking place where affordability has been most stretched due to lack of new and existing stock – such as in London – and inflation higher than wage growth.’ He elaborated further to This is Money: ‘The short-term impact of Brexit on the housing market was probably overestimated but the longer-term effects may have been underestimated. However, now that the government is negotiating the UK’s exit from the EU, further uncertainty seems inevitable until the final outcome becomes clearer.’
 
Does student accommodation make for a good investment? Jeremy Leaf told The Times: ‘There are two principal questions: should you take the self-managed or managed option? The first involves more work and risk but gives more control over the process and could generate higher returns. You would need to acquaint yourself quickly with present/future supply and demand in favoured locations, as well as planned investment – not just in terms of local infrastructure, but in student accommodation. For instance, is a present shortage of supply a direct result of the targeted university or college’s lack of a halls of residence that is shortly to be addressed?’
 
London house prices have fallen for the first time in eight years, according to the Nationwide. Jeremy Leaf told BBC News: ‘It shows the north-south divide in reverse, and confirms what we have been seeing on the ground – that the London market is struggling, mainly for affordability reasons.’ When discussing with ITV.com, he added: ‘Buyers and sellers are still nervous about prospects for the market in view of lack of perceived progress in Brexit negotiations and concerns about imminent rises in interest rates.’ He also told The Guardian: ‘It is only those sellers who recognise the changed market conditions that are doing deals.’
 
Meanwhile, the Office for National Statistics reported that average house prices rose 5.1 per cent in the past year, up from 4.9 per cent in June. Jeremy Leaf told What Mortgage: ‘The market remains relatively subdued due to a shortage of homes for sale, as well as stretched house prices to earnings ratios and lending restrictions. Average house prices are still rising more quickly than wages, especially in London, so affordability is reaching breaking point in some places. On the high street we have noticed some nervousness among potential purchasers that interest rates will eventually rise, although the chances of an increase in the short term have diminished recently. Even small increases could cause problems for many consumers in view of high borrowing levels.’
 
Now could be an excellent time for first-time buyers to get on the housing ladder. Jeremy Leaf told The Independent: ‘Investors are feeling the pinch from increased taxation and stricter regulations, which has certainly levelled the playing field. But on the other hand, rents are still going up due principally to the shortage of accommodation, which makes it harder for first-time buyers to save for a deposit and it is taking them a lot longer. The other factor, of course, is that lenders have introduced tighter affordability criteria, making it even more difficult for first-time buyers to get that vital early step on the ladder.’