Average house prices fall in London year on year for first time since 2009
Average house prices in the UK increased by 4.4% in the 12 months to February 2018, down slightly from the 4.7% recorded in the previous month, taking the average to £225,000, according to official figures.
The data from the Office for National Statistics (ONS) reveals that the annual growth rate has slowed since the middle of 2016 but remained generally under 5% throughout 2017 and into 2018.
The annual decline is driven mainly by a fall in London. Average house prices in London decreased by 1% in the year to February 2018, the first annual fall since September 2009 and values in the city have now been falling since the middle of 2016.
In England house prices increased by 4.1% year on year to an average of £242,000, in Wales they rose by 4.8% to £153,000, in Scotland they were up 6.2% to an average of £144,000 and in Northern Ireland they were up 4.3% in the year to December 2017 to £130,000.
On a regional basis, London continued to be the location with the highest average house price at £472,000, followed by the South East and the East of England, at £322,000 and £288,000 respectively. The lowest average price continued to be in the North East at £128,000.
The West Midlands showed the highest annual growth, with prices increasing by 7.3% in the year to February 2018, followed by the East Midlands up 6.3%. After London, the lowest annual growth was in Yorkshire and the Humber, where prices increased by 3.1% in the year to February 2018.
Month on month it was a more mixed picture with prices down overall by 0.1%. Prices fell by 2.1% in London, by 1.1% in the South West, by 0.4% in the East of England, and by 0.1% in Yorkshire and the Humber and the South East. Price increased by 3.1% in the North East, by 2.2% in the West Midlands, and by 1.6% in the North West.
The slowdown in market conditions could be coming to a close, according to Russell Quirk, chief executive officer of Emoov. He said that other more current industry indicators are showing that the market is ready to grow.
‘There is still an appetite for home ownership and as we come to the end of a long period of Brexit uncertainty and political instability, this will only grow. Outside of London other regions of the UK are enjoying a return to strong price growth trends,’ he pointed out.
The figures are not reflective of market conditions right now which show strong demand from buyers and stock levels on the rise, according to Sam Mitchell, chief executive of online estate agents HouseSimple.
‘February and March were difficult months because of the inclement weather, but the market has come to life in the past week. We are now in the crucial Spring period, and early indicators suggest we are going to see plenty of activity during the remainder of April and May,’ he said.
‘This is certainly the case in the North, in major urban areas such as Liverpool and Manchester, where the first time buyer stamp duty boost has had the greatest impact. Buyers are showing more urgency to purchase. They are still looking for good value and savvy sellers will understand the market and price sensibly to get a quick offer. Even in the tougher London market, there are plenty of buyers, but they are price sensitive. However, a property priced attractively will still sell within a couple of days,’ he added.
Thomas Fisher, economist at PwC, said that the firm broadly expects current market conditions to continue and predicts that UK wide house price inflation to be around 4% in 2018.
However, Jonathan Hopper, managing director of Garrington Property Finders, believes that there is a big difference between prices slowing and prices sliding. ‘Fortunately most home owners and would-be home owners are seeing the former. Growth is growth and the gentle upward trajectory in prices cannot be dismissed as merely the happy by-product of short supply. There is genuine demand for appropriately priced homes,’ he said.
‘On the front line we’re seeing a functioning, albeit cautious property market. Prices in London remain under intense pressure, but elsewhere the picture is of stability rather than stagnation,’ he explained, adding that with wages now outpacing inflation the Bank of England may look to increase interest rates in the coming months and this may tempt buyers to move faster.
John Goodall, chief executive officer of buy to let specialist Landbay, believes problems with affordability and supply remain. ‘At a regional level, price rises in London continue to lag behind the likes of the East Midlands and East Anglia, a sign that demand in the capital is cooling as many buyers migrate away in search of something more affordable,’ he said.
‘Affordability is a key concern for aspiring home owners, especially in London where they are battling rents that are 2.5 times those across the rest of the country. When you also factor in inflationary pressures, poor saving rates and weak wage growth, saving towards a deposit on a home of their own is near impossible,’ he added.