Asking prices rose increased by 0.4% in England and Wales in May and by 0.6% in Scotland with the continued growth being seen in regions rather than in London, according to the latest index to be published.
Year on year prices were up by 2.8% in England to an average of £305,885, led by growth in the East of England, the East Midlands, the West Midlands and the South West, according to the figures from Home.co.uk.
In Scotland price increased by 1.8% year on year to £182,337 but in Greater London asking prices were down by 0.1% month on month and down by 1.2% year on year to an average of £543,778.
But there has been a trend towards better market conditions in the North of England with considerable improvement in property marketing times. Increased demand coupled with limited supply has pushed up prices significantly in the region.
Indeed, prices increased by 3.7% year on year in the North West and by 2.9% in Yorkshire and while the North East has yet to indicate significant year on year growth, Doug Shephard, director of home.co.uk, pointed out that marketing times are back down to 2008 levels and recovery looks set to follow.
The East of England continues to head the regional league table for price growth, followed by the East Midlands, the South West and the West Midlands. All show price growth over and above the rate of inflation and, with the exception of the East, marketing times are either the same or lower for all these regions compared to June 2016.
But, overall Shephard said that the national figures continue to reflect a stagflationary housing market. ‘Whilst recent price rises in the regions indicate that there remains much confidence and momentum, the drag effect of sliding prices in Greater London means the trend towards near zero year on year price growth appears inevitable,’ he explained.
‘Moreover, rapidly rising inflation due to a weaker post-Brexit pound means that, overall, capital values will not rise in real terms. Looking forward towards the autumn and winter, we expect significant price falls in London and the South East, and these will impact negatively on the national figures. In June 2016 the annualised rate of increase of home prices was 6.8%; today the same measure is just 2.8%,’ he added.
The index also shows that the number of properties entering the UK market in May was slightly down on April, although supply is up overall by 5% year on year. Supply has increased further in the East of England, London and the South East by 21%, 18% and 15% respectively compared to May 2016.
The outlook for the rental market is positive for investors in a number of regions, the index report also suggests. ‘A key driver in some regional markets is buy to let investment and, judging by the falling stock levels of property for rent in Wales and in York, investment in both areas is an increasingly attractive proposition,’ said Shephard.
‘The regions to watch are Wales and Yorkshire with rents up 11.5% and 8.5% year on year respectively. These rises are significantly above the rate of increase of the underlying home values. Rents, of course, follow the laws of supply and demand like any other fluid market,’ he pointed out.
‘These large hikes in Wales are due to a calamitous fall in available stock for rent. Demand is outstripping supply and, as long as supply continues to fall, rents will become increasingly expensive. The stock of property available for rent in Wales has fallen by 36% over the last six years. We expect this situation, which ensures lower void periods and higher yields, to attract considerable buy to let investment going forward,’ he concluded.
