Annual house price growth in UK in May was 4.7% well below a year ago

House price growth in the UK was 4.7% in the 12 months to the end of May 2017, taking the average value of a home to £220,713, the latest official data shows.

The figures covering England, Scotland, Wales and Northern Ireland also show that prices increased by 0.5% in May compared to the previous month.

Prices in England increased by 5% year on year and by 0.5% month on month to an average of £237,662, in Wales they increased by 3.8% year on year to £150,000, in Scotland by 3.5% to £143,000 and in Northern Ireland they were up 4.3% in the year to the end of March to £124,000.

In London, an annual price increase of 3% was recorded, taking the average property value to £481,345 but month on month prices fell by 0.3%, the data also shows. The South East also saw a fall of 0.3%.

A breakdown of the figures shows that the biggest annual rise was in the East of England, up 7.5% while the North East saw both the greatest monthly price growth with an increase of 1.8% and the lowest annual price growth with a movement of 1.6%.

London continues to be the region with the highest average house price at £481,000, followed by the South East and the East of England, which stand at £316,000 and £284,000 respectively. The lowest average price continues to be in the North East at £127,000.

In May 2017, the most expensive borough to live in was Kensington and Chelsea, where the cost of an average house was £1.5 million. In contrast, the cheapest area to purchase a property was Burnley, where an average house cost £78,000.

Russell Quirk, chief executive of eMoov, believes that the figures show that the property market at present is as unpredictable as the economic and political landscapes that are influencing its buyer and seller demand.

‘But whilst these top line figures paint a picture of a marginally declining market, it is important to note that annual growth is still up and there are still areas of the nation performing very well where property price growth is concerned,’ he said.

John Goodall, chief executive officer of buy to let specialist lender Landbay, thinks that buyers are starting to feel the pressure of falling real wages and entering the market in fewer numbers. ‘But demand is only half of the story, insufficient house building continues to restrict the number of available homes for sale, which may not be creating house price pressure at the moment, but will when demand begins to pick up again,’ he said.

‘While the pace of house price growth may have slowed, house prices still continue to rise, ultimately meaning that fewer people can afford to buy, which can only place greater pressure on the UK’s rental sector,’ he pointed out.

‘For that reason it’s essential that new construction is planned across all tenures, so that rents don’t escalate to the point where they’re inhibiting aspiring home owners’ ability to save for a deposit. Quite simply, we need to build more purpose built rental homes to support those hoping to take their first steps onto the property ladder,’ he added.

Meanwhile, Shaun Church, director at mortgage broker Private Finance, pointed out that the rate of annual house price growth is substantially lower than it was a year ago, reflecting a subdued housing market. ‘A dearth of property supply is limiting transaction volumes, which in turn is tapering house price rises,’ he said.

But he does not thing that there will be a significant fall in growth. ‘Low mortgage rates coupled with high demand from would be buyers will continue to support activity in spite of political and economic uncertainty. Young, professional buyers in the capital will benefit from softer price rises, particularly as wage growth is expected to pick up,’ he added.

There is still genuine buyer intent, but it is accompanied by acute price sensitivity, according to Jonathan Hopper, managing director of Garrington Property Finders. ‘Even though the number of homes for sale is at an all-time low, many buyers would rather walk away than pay a penny more than a price they deem favourable,’ he said.

‘The economic backdrop is finely balanced. Mortgages are cheap but real wages are stuck in reverse, making affordability and home ownership more of a stretch for increasing numbers of would-be buyers,’ he explained.

‘The shortage of supply continues to artificially prop up property prices, but the reality in many areas is that sellers need to be willing to swap a degree of flexibility on price for the certainty of a sale. Sellers who recognise this and are pragmatic with their pricing are the most likely to be the ones moving this summer,’ he added.