House price growth in England and Wales at slowest since 2013

House price growth in England and Wales is at its slowest since 2013 but despite this average property prices set a new record of £275,123, the latest data shows.

March saw the smallest annual change in house prices in 16 months at 5.6% or £14,620, according to the LSL England and Wales house price index.

The slowdown was more prevalent in the south as London was hit by the threat of higher stamp duty charges and a potential mansion tax after the general election.

Month on month prices were up 0.2% and the annual change when London is excluded from the calculation was slightly lower at 4.9% but the difference has narrowed considerably.

While sales were up 11.6% in March this was only half of the typical monthly upswing expected to take place at this time of the year and sales in the first quarter of 2015 were down 5% year on year.

Adrian Gill, director of Reeds Rains and Your Move estate agents, said that annual house price growth has now been waning for half a year, and hasn’t been this sluggish since November 2013.

He also pointed out that this is far from typical as the general election next month means that cautious buyers are holding back to wait and see what happens with whoever forms the next government and property regulation is a hot topic in one of the most uncertain UK elections in a generation.
‘Examining the regional pattern of movement, it becomes apparent that we’re seeing less of a downturn than a convergence. The radical stamp duty overhaul has greatly boosted the prospects of buyers across the country, and injected new life into areas where prices have been stalled and the recovery yet to show its face,’ he explained.

‘But the small minority of those negatively affected by the restructuring of the old slab system are disproportionately concentrated in the more expensive, southern regions of England. Naturally, London has been the hardest hit at the sharp end of this reform, and also most directly threatened by future mansion tax, possessing the lion’s share of high-end property, and the clustering of properties in the million pound price bracket mirrors the locations where price rises have cooled most quickly,’ he added.

He also pointed out that between January and February, the South West has seen annual house price rises fall back from 5.5% to 4.4%, the most marked slowdown across England and Wales, and closely followed by London and the South East, which both experienced falls of 0.9%.

‘While values in London and the South West are no longer at their peak, the East and West Midlands and East of England are instead among those setting new price records in February,’ said Gill.

‘For so long, London has been the workhorse dragging up overall measures of UK house price growth, but we’ve reached a new equilibrium. While house price growth is more measured than it was a year ago, it’s also far more evenly distributed across the country, with London having the most negligible impact on barometers of house price growth for three years,’ he added.

‘The difference between annual growth including and excluding the capital is now only 0.5%, the smallest gap since March 2012. Striking this fairer balance between London and the rest of the country is only good news for the long term sustainability of the housing market recovery,’ he concluded.