Asking prices creep up again in England year on year
Asking prices increased by 0.3% across England and Wales month on month in October to £309, 692 and year on year are now up just 0.1%, according to the latest index figures.
But in Scotland the market is slightly more buoyant with asking prices up 0.7% on a monthly basis and up 1.6% year on year to £188,937, the index from Home.co.uk shows. While in Wales they increased by 0.2% and 4.1% to £213,275.
A breakdown of the figures in England show that asking prices increased 2.4% year on year in the North East, but were down 0.2% month on month to £160,754 and in the North West up 0.6% and 2.3% to £208,807.
In Yorkshire and the Humber asking prices were up 0.7% and 2.8% to £203.593, in the West Midlands by 0.4% and 1.8% to £256,077, in the East Midlands by 0.5% and 2.1% to £239,550.
Asking prices in the East of England increased by 0.5% on a monthly basis but are down by 2.4% year on year to £351,237 while in the South East they were up 0.3% month on month but down 1.3% on an annual basis to £396,214.
In Greater London asking prices were up 0.2% month on month but down 1% year on year to £516,854 and in the South West they were flat year on year but up by 0.1% month on month to £326,247.
According to Doug Shephard, director, nationwide, home prices are holding remarkably steady, while at a regional level, the property market presents a more mixed picture. There is positive growth in the recently booming Northern and Western regions of England and Wales but it is waning.
The East of England remains in the grip of the inevitable post boom price correction, and the South East has yet to exit a period of negative growth while the housing market in London appears to be on the road to recovery. Acute supply shortages will help to reinvigorate these markets, according to Shephard.
Annualised price growth across England and Wales has moved out of the red and is now up 0.1% after eight consecutive months of negative growth.
The report also reveals the effect of an acute drop in supply across all regions, with a double-digit fall across England apart from in the West Midlands and Yorkshire where it is down 5% and 7% respectively. The fall is led by London at 33%.
‘Price growth, price correction and recovery can all be identified in different regions, depending on where they are in the property cycle. However, the drop in supply will push up growth and accelerate recovery while at the same time limiting the extent of price corrections,’ said Shephard.
‘Indeed, the East of England is a case in point, wherein the average mix-adjusted price has risen by 0.5% since last month, despite being in the throes of a price correction, thanks to a supply drop of 15%. Recovery of both the Greater London region and the South East will advance more quickly due the dearth of property for sale. The severely limited stock available will soon be overwhelmed by pent-up demand, accelerating the transition back to the price growth phase of their respective property cycles,’ he explained.
‘London now shows the first signs of recovery following a long and protracted downturn. Rent hikes are gaining momentum with a total of seven London boroughs now showing double-digit rent inflation, and this is rapidly translating into much improved yields, thereby enhancing the attractiveness to the buy to let investor,’ he pointed out.
‘With the pound at a relatively low exchange rate, the promise of attractive yields will likely attract significant investment from overseas. In view of the current drop in supply, such added demand would have a disproportionate effect on property values in the capital. Moreover, rising asking prices in Hammersmith, Islington, Camden, South Kensington and Tower Hamlets, to name but a few central locations, suggest the investors are already queuing up,’ he added.
Shephard also pointed out that the East and West Midlands markets have been losing momentum over recent months, largely due to overpricing following a long period of home price growth. ‘The new instruction rate has not fallen very much compared to other regions, suggesting that many vendors remain keen to exit these overbought regions. Reduced supply may delay but not obviate the inevitable yet painful rebalancing of supply and demand that will take place in the Midlands,’ he said.
Further afield, the South West is now clearly showing signs of recovery. Growth remains out of the red for a second consecutive month, flat year on year and supply has been cut radically: down 19% compared to 12 months ago.