UK property prices edge up again month on month as lack of supply keeps values high
Property prices in the UK increased by 0.3% in July and at an average of £211,671 are 2.9% higher than a year ago, according to the latest index data to be published.
Even although the annual rate has fallen from the 3.1% recorded in June, annual house price growth is only just outside the 3% to 6% range that it has been for most of the last two years, the data from the Nationwide index shows.
According to Robert Gardner, Nationwide’s chief economist, the figures show that the British housing market is broadly stable and he forecasts that this is set to be the case in the short term at least.
‘On the surface, this appears at odds with recent signs of cooling in the housing market. The number of housing transactions dipped to their lowest level for eight months in June, while in the same month the number of mortgages approved for house purchase moderated to a nine month low of around65,000,’ he explained.
‘But a lack of homes on the market appears to be providing support. Survey data point to relatively sluggish levels of new buyer enquiries, but at the same time surveyors report that relatively few properties are coming onto the market and at a time when the number of homes on estate agents’ books is already close to 30 year lows,’ he pointed out.
‘Ultimately, housing market developments will depend on wider economic performance. The UK economy slowed noticeably in the first half of the year and there has been little to suggest a significant departure from recent trends in the quarters ahead,’ he said.
‘While employment growth has remained relatively robust, household budgets are coming under pressure as wage growth is failing to keep up with the rising cost of living. This suggests that housing market activity is likely to remain subdued, with the balance in the market shifting a little further towards buyers in the quarters ahead,’ Gardner added.
‘Nevertheless, constrained supply is likely to continue to provide support for house prices and, as a result, we continue to expect prices to rise by around 2% over 2017 as a whole, only modestly lower than the levels recorded in recent months,’ he concluded.
Mark Weedon, head of institutional development at buy to let investment platform Property Partner, also believes the figures are a sign of stability. ‘Despite uncertainty across the political spectrum, with the realities of Brexit slowly starting to become more clear, house prices again demonstrate their resilience,’ he said.
‘Simply put this index highlights the strength and stability of the housing market. Mortgages look set to remain good value and the lack of housing stock nationally shows no sign of abating, something which will continue to support house prices,’ he added.
Lucy Pendleton, director of independent estate agents James Pendleton, believes there are signs of continued confidence in the housing market. ‘Prices fell for three straight months between March and May but before that you would have to go back to June 2015 to find the previous monthly fall,’ she pointed out.
‘These slight contractions were not dramatic however, particularly when you consider the traditionally slower summer months have often begun with more severe falls than this. Given there are other factors at play, including a squeeze in consumer spending, this could be seen as a sign of confidence among buyers,’ she explained.
Buyers have returned to the market after the snap election but they are price sensitive, according to Jonathan Hopper, managing director of Garrington Property Finders.
‘Limited supply is propping up prices, while the limited number of buyers is giving the astute house hunter the leverage to negotiate hard on price and secure sizeable discounts. With pragmatic sellers often willing to trade price reductions for the certainty of a sale, the market’s fundamentals remain in place even if the pace is slowing,’ he said.