The East of England saw the largest monthly rise of 1% as demand continues to outweigh supply in the region but overall the annual home price for England and Wales fell to 7.5%, the data from the Home.co.uk index shows.
The report suggests that typical time on Market figures in the East of England, the South East and Greater London are contrary to seasonal expectations, and this is a clear indicator that the anticipated slowdown is taking hold as demand dips, at least for the time being, while the market pauses for breath.
The total stock of property for sale remains historically very low indeed despite gradually rising supply in London and Scotland. In all English regions outside of London and in Wales, scarcity holds firm as the key market driver. Overall, the number of properties entering the UK market is down 6% compared to a year ago.
The supply shortage is most keenly felt in the West Midlands where 12% less new stock arrived on estate agents' books during last month compared to March 2015, and this will ensure prices in this region keep rising over the summer months. Similarly, the South West of England supply shortage is worsening as indicated by 11% less stock being registered on agent portfolios last month.
The index report point out that market activity in the formerly lacklustre North East shows signs of significant improvement. There and in the North West, marketing times have reduced considerably and prices are on the rise. The North West market is improving more quickly as supply levels in this region indicate a new declining trend and consequently prices may show further significant upward progress across the rest of the year.
Meanwhile, the Welsh property market remains the poorest performer. Prices there have fallen by 0.2% over the last six months and marketing times are higher than in any English region or Scotland.
‘Overall, the current mix-adjusted average asking price for England and Wales is now 7.5% higher than it was in April 2015, and we predict further rises over the next few months due to worsening supply in an increasing number of regions. However, the year on year rise is expected to attenuate as the London market cools,’ said Doug Shephard, the firm’s director.
He explained that a buy to let stampede ahead of the new stamp duty charges means that growth might now slow. ‘Any sort of lull in demand from investors will be welcomed by first and next time buyers, especially those who had the wisdom to sit on their hands until the dust settled,’ he said.
‘The current figures suggest that London will be the best area to take advantage of waning demand and rising supply, but prices today remain very high and properties will need to hang around on the market much longer than they currently do before sellers will budge from their asking price. However, vendors in Belgravia, where the number of unsold properties has increased by 41% over the last year, are already cutting their asking prices and the average price for a flat in this prime location has slipped by 3% over the same period,’ Shephard pointed out.
‘As we predicted, the East of England has become the UK’s leading price growth region owing to phenomenal demand and low supply. There and in the South East, we expect that prices will hit their affordability limits later this year as already seen in London. Moreover, we expect a similar price growth dynamic to take hold in the West Midlands, the South West and the East Midlands this summer, together with further significant price growth in 2017, he said.
But he warned that the predictions are dependent on the UK staying in the European Union. A vote to leave in the referendum in June would affect the property market. ‘A vote to opt out would most certainly destabilise the UK’s financial system and could prompt a hike in interest rates. This would spell disaster for the highly leveraged UK property sector. In a recent communication, the Bank of England stated in no uncertain terms that Brexit amounts to the biggest single threat to financial stability in the UK,’ he concluded.
