Property market growth in the UK remains subdued, latest lender index shows
Annual property price growth in the UK remained below 1% for an eighth month in a row in July, up just 0.3% to £217,663, according to the data from the latest lender index.
Month on month prices also grew by just 0.3% and home mover activity is subdued, the index report from the Nationwide also shows.
According to Robert Gardner, Nationwide’s chief economist, while house price growth has remained fairly stable, there have been mixed signals from the property market in recent months.
‘Surveyors report that new buyer enquiries have increased a little, though key consumer confidence indicators remain subdued. Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable,’ he said.
‘Housing market trends will remain heavily dependent on developments in the broader economy. In the near term, healthy labour market conditions and low borrowing costs will provide underlying support, though uncertainty is likely to continue to exert a drag on sentiment and activity,’ he explained.
‘Taking a longer term view, housing market activity has been broadly stable in recent years, with the number of properties changing hands equal to around 5% of the total number of homes in the UK. This turnover rate of around 5% is significantly higher than the lows seen in 2009, but is still well below the rates of 8% seen pre-crisis,’ he pointed out.
He believes that one of the key factors behind the low turnover rate is the continued weakness in home mover activity, which is still less than half the levels prevailing in 2007. By contrast, first time buyer transaction numbers have now almost recovered to pre-crisis norms.
‘This reflects the steady improvement in labour market conditions in recent years, together with historically low mortgage interest rates, and an improvement in credit availability, including the introduction of schemes such as Help to Buy,’ said Gardner.
‘It is less clear why home mover activity has remained so subdued. However, the lack of properties on the market is likely to be a factor. This has led to a less liquid market, which may be deterring some potential home movers from trying to sell their own properties, a trend which becomes self-reinforcing,’ he added.
Tomer Aboody, director of property lender MT Finance, said that it is welcome news that first-time buyer numbers are hitting levels close to pre-crisis norms, helped by low mortgage rates and a combination of shared ownership, help to buy incentives and high employment and believes that lower stamp duty on the cheapest homes has also played a part in boosting numbers.
‘However, it is no surprise that overall sales volumes are down and they will stay down until stamp duty is reviewed and either lowered or overhauled. Once this is done, the market will be re-energised, which will help increase overall sales figures and lead to more transactions,’ Aboody added.