Average house prices in the UK have increased by 7.7% in the year to September 2016, the same as the previous month, and 0.2% month on month, the latest nationwide index shows.
This takes the average price of a home to £218,000, some £16,000 higher than in September 2015 but London continues to be the region with the highest average house price at £488,000.
Indeed, the index figures from the Office of National Statistics and Land Registry show that London house prices rose 1.4% month on month, the fastest rate of any region and in Croydon house prices have risen from £320,175 to £373,339 year on year, a rise of 16.6%.
The average house price of a new build home in London has increased 23.3% annually and for a first time buyer in London the price of a house has risen 11% year on year.
In England, the September data shows an annual price increase of 8.3% which takes the average property value to £234,250 and up 0.2% since August 2016 while the East of England experienced the greatest increase in its average property value over the last 12 months with a rise of 12.1% while the North East saw the lowest annual price growth with an increase of 1.5% and the North East also saw the most significant monthly price fall with a drop of 1.9%.
The average price of property in Scotland increased by 3.4% year on year and 0.2% month on month to an average of £143,006 and in Wales prices increased by 4.4% year on year to an average of £146,388.
But sales are falling. The most up to date figures are for July 2016 which show that the number of completed house sales in England fell by 28.1% to 66,870 compared with 93,040 in July 2015, and the number of completed house sales in London fell by 43.3% to 7,074 compared with 12,481 in July 2015 while in Wales sales were down by 23.4% to 3,525 compared with 4,603 in July 2015.
Richard Snook, senior economist at PwC, said that the figures reveal the resilience of the UK housing market in the face of Brexit. ‘We now have three months of post-Brexit official housing figures, which show price growth remaining robust, but fewer properties changing hands,’ he pointed out.
‘At the start of the year, we expected slower house price growth, but in fact it has shown impressive resilience: in the first three quarters of the year average annual house prices were up by around 8% across the UK compared to the same period last year,’ he explained.
‘But high prices are causing some buyers to stay out of the market altogether. The data shows residential transactions in September were just 93,000, some 11.3% lower than the previous year. This implies that underlying demand may be weakening as property becomes less and less affordable,’ he added.
John Eastgate, sales and marketing director of OneSavings Bank, believes that the long term upward trend will continue, and political uncertainty must not distract policymakers from the underlying structural issues that continue to plague the housing market.
‘Buyer demand has rebounded following political uncertainty over the summer to rise for a second consecutive month in October. In contrast, estate agents are reporting fewer available properties on their books, a symptom of the chronic undersupply facing the UK housing market. This will push up prices in the longer term, hampering affordability, at a time when real term incomes may begin to fall,’ he said.
He hopes that there will be new measures announced in the Autumn Statement from the Chancellor Philip Hammond next week to encourage more home building and improve affordability in the housing market. ‘An £18 million fund announced last week to accelerate planning permissions in England is one such measure, but this alone is but a drop in the ocean if we are hit the 300,000 new homes per year that the UK will need,’ he concluded.
According to Nick Davies, head of residential development at Stirling Ackroyd, first time buyers, especially in London, hopes of getting on the property ladder is more distant than ever.
‘The majority of the growth in London’s house prices is coming from the more affordable parts of East London and the outer boroughs. As these boroughs are usually areas chosen by first time buyers, they’ve seen some of the steepest increases, rising 11% year on year in London,’ he pointed out.
‘This means that most first time buyers in London fall into the 5% stamp duty band, a clear failing of a Government supposed to support home ownership. The Government should consider scrapping stamp duty or raising the tax bands, if they want to help Londoners achieve home ownership,’ he added.
It should be a matter of concern that property prices are rising considerably more than inflation, particularly in the South of England, according to Rob Weaver, director of investments at property crowdfunding platform Property Partner.
‘The structural mismatch between supply and demand has helped support prices. And a dramatic drop off in the number of homes sold in England in the year to July shows a severe lack of available stock. Next week’s Autumn statement will be listened to very carefully. The stamp duty changes have been a tax on mobility and a disincentive to build,’ he said.
Jonathan Hopper, managing director of Garrington Property Finders, pointed out that annual rates of price growth remain comfortably above where they were a year ago but an analysis of the figures behind the headlines shows that prices are being buoyed by a combination of robust demand and severely squeezed supply with the number of homes sold in England slumped by more than a quarter on the same time last year.
‘The real engine for rising prices is demand. The promised spike in consumer inflation has so far been modest, and buyer confidence is being boosted by rock bottom interest rates, a solid labour market and an economy that continues to grow. Many would be buyers who had been holding off until the referendum dust settled have given up trying to second guess the Brexit saga and are instead focusing on the market’s strong fundamentals, and the knowledge that in many areas it’s a buyer’s market,’ he explained.
