UK property market shows no signs of letting up with positive growth nationwide
Property prices in the UK increased by 5.1% in the 12 months to July 2017 taking the average value of a home to £226,185, according to the latest official figures to be published.
Month on month prices increased by 1.1% and overall the UK house price index shows that there is a slowdown underway in London and the market in Scotland is stronger than in Wales.
A breakdown of the figures show that year on year prices increased by 5.4% in England and by 1% on a monthly basis to an average of £243,220 while in London they were up 2.8% year on year and 0.3% month on month to £488,729.
In Scotland prices increased by 4.8% in the year to July to £145,185 and by 2.8% month on month, the strongest monthly rise, while in Wales the annual rise by 3.1% but prices fell 0.3% month on month taking the average to £150,846.
On a regional basis in England and Wales the East Midlands experienced the greatest increase in average property price over the last 12 months with a rise of 7.5% while the North East experienced the greatest monthly price growth with an increase of 3.3%.
London saw the lowest annual price growth with an increase of 2.8% and the South East saw the most significant monthly price fall of 0.4%.
Prices increased annually in every region in Scotland apart from Aberdeen and the Western Isles with falls of 7.7% and 4.6% respectively. The biggest annual rise was in the Orkney Islands with growth of 14.2%, followed by 9.6% in Edinburgh, 7.5% in Angus, 7.4% in Dumfries and Galloway and 7.2% in Moray.
Nationwide sales increased by 8.3% year on year and by 1.3% month on month with the highest growth in the East Midlands at 7.5% while the slowest annual growth was in London at 2.8%. It is the eighth month in a row that house price growth in London has remained below the UK average.
The figures provide the most compelling evidence yet that the UK property market has been able to shake off the woes of the previous year and snap election, to see positive growth during the summer months, according to Russell Quirk, chief executive officer of eMoov.
‘The rate of growth during this period is higher than previously reported by Halifax and Nationwide, which is impressive given that this price data usually lags slightly behind other industry sources that base their figures on mortgage approvals rather than sales completions,’ he said.
‘A sustained level of growth can now be expected and it is unlikely that any further developments in the Brexit process should dampen this. Although the market has taken a wobble, UK homeowners should rest assured that the worst is now behind them and we won’t be seeing a repeat of the 2007 crash,’ he added.
But it is a shortage of housing supply that is propping up the market, Nick Leeming, chairman at Jackson-Stops, pointed out. ‘Current house price growth is underpinned by a shortage in the supply of homes, combined with beneficial mortgage rates and high levels of employment. However, it must not be forgotten that transactional levels are sluggish and new buyer enquiries to estate agency branches are at a low,’ he said.
‘The new normal over the next couple of years is a market of low transactions, as uncertainty caused by Brexit negotiations and issues surrounding stamp duty land tax levels continue to influence the market,’ he added.
Jonathan Hopper, managing director of Garrington Property Finders, believes that price rises are being driven by pragmatism rather than exuberance. ‘The chronic shortage of supply has placed a floor under prices, while demand has been underpinned by a combination of cheap mortgages and a resilient jobs market, which so far has shrugged off the growing inflationary threat,’ he said.
‘Despite months of political uncertainty, buyer sentiment has remained robust in many areas. That said, few buyers are rushing and most won’t hesitate to walk away from a property being offered at anything other than a highly competitive price. The result of this sticky stand-off has been a gradual softening of prices rather than a significant correction,’ he explained.
‘Nevertheless momentum is returning, and the market has become notably more free flowing after the summer hiatus. In this environment, pragmatic sellers who are willing to adjust their price expectations are the best placed to capitalise on the shift in the market dynamics and achieve the sale they want,’ he added.
Even taking low mortgage rates into account, John Goodall, chief executive officer of buy to let specialist Landbay, the figures suggest strong overall buyer demand which continues to outpace the number of homes coming to market.
‘The UK’s housing shortfall needs plugging, but the initiatives designed to address the problem are blinkered at best. Yes tax reform and Government schemes to help first time buyers will improve access to housing in the short term, but without a radical house building plan, prices will continue to rise over the coming decades,’ he pointed out.
‘Aspiring home owners are looking to the private rented sector to support them on their path to ownership, so more action on Build to Rent properties would be a welcome development,’ he added.
Landlords and property owners will be rightly heartened by the figures, according to Mark Weedon, head of institutional investment at Property Partner. ‘The market remains stable and the traditional summer slowdown in the housing market does not appear to have dampened prices,’ he said.
He pointed out that annual house price growth, which increased to 5.14%, is the highest it’s been so far in 2017. ‘While this isn’t at the high levels seen in recent years, this represents a healthy return for investors, particularly when taken in the context of continued low interest rates,’ he explained.
‘With no signs of an end to Britain’s chronic lack of housing supply, or any indication that interest rates will rise materially in the foreseeable future, house prices remain on solid ground and look set to continue to make steady progress,’ he added.