Observing property prices is an interesting game, not least because at the moment they are all over the place. In the UK, for example, so much depends on local demand and supply.
So it was fascinating to look at the figures from the latest Knight Frank global city index, as it too is all over the place. Moscow, for example, has the second highest annual growth rate and London is down at 40 out of 45, while Vancouver has seen prices fall by 14.5%.
Dublin, which has seen consistent growth is now in negative territory with a price fall of 1.8%, yet Edinburgh, also a strong market, continues with good growth at 7.6%, the fifth highest.
Now, these figure relate to prime property markets so they cannot be applied universally, but what happens at the top end does affect the rest of the property ladder, so it is interesting to see what is happening there.
Looking at the market as a whole, it is not particularly pretty. Average prices in England and Wales, excluding Greater London, fell by 0.3% in the 12 months to April 2019, the lowest level since 2013, according to the latest analysis report from London Central Portfolio.
They also fell by 0.8% month on month and 2.4% on a quarterly basis and sales also fell by 0.3% year on year and were down by 6.5% on a quarterly basis. But there is a different pattern in the new build market with prices up 3.9% year on year, representing a 14.9% premium over existing stock. Sales were also up in this sector with an annual rise of 5.3% but they were down 17.3% on a quarterly basis.
Average prices have been on a downward trajectory now for seven consecutive months. Where previously England and Wales had not shown the same signs of Brexit jitters as the capital, it appears that this is no longer the case.
Annual transactions are stuttering with a sizeable drop of 6.5% over the quarter and 0.3% annually. These figures should not come as a surprise, with Rightmove recently reporting that 28% of listings have sat on the sales market for more than six months.
But it does depend on where you are. For example, across Scotland, on average, properties are selling for £4,000 more than their asking price, with the price for sale increasing across much of the country, the latest data from S1homes shows.
But we also need to look at other factors. It is worrying that retired home owners in the UK are using their housing wealth to clear debts to strengthen their finances. The figures from equity release advisor Key, covering the first quarter of 2019, show that one in three paid off credit cards and loans and 28% cleared outstanding mortgages.
You do have to wonder what is happening in the market to cause older home owners to use their housing wealth like this as the number of customers using money from their homes to pay off credit cards and loans hit a three year high of 35%, some 5% more than in the first quarter of 2018. In addition, 28% used property wealth to clear outstanding mortgages compared with 21% in 2018.
Key’s data shows the numbers using property wealth to clear debts in the first three months of the year was the highest since the third quarter of 2016 and the third highest on record since Key started the Market Monitor in 2007.
Buying a home and having money tied up in a property should be part of overall financial planning and we do need to keep an eye on what that equity is being used for. Is paying off a debt better than taking a round the world cruise? Is staying in a property that is too large better than downsizing? It is an interesting area of discussion that can only grow.
Which comes back to the idea of playing a game. At the moment it seems to be a case of picking the colour of your counter and rolling the dice as anything could happen in the next 12 months.
Ray Clancy,
Editor, Propertywire
