There are two sets of figures that have come out that show the state of the UK’s housing market and it is good news when looking ahead even although Brexit uncertainty is set to continue with the date of leaving the European Union now delayed.
Rightmove’s monthly figures show that while asking prices are continuing to fall on an annual basis, down by 0.1% in the 12 months to April 2019, month on month they increased by 1.1%, the biggest monthly for over a year and the largest at this time of year since 2016.
This is significant because it shows that the usual Spring boost is there, although subdued compared to where it should be. There is the usual regional variation with asking prices down in London and the South East, but the picture is one of hope.
Yes, the uncertain political backdrop continues to hold back the market, with new seller asking prices, the number of properties coming to market and the number of sales agreed all below this time last year. But despite these headline falls, market activity remains resilient with would-be buyers and sellers still having housing needs to satisfy, especially in the family home sector.
There has been a lot written about how the market is helping first time buyers by keeping price growth subdued at a time when interest rates are very low, so it is good to see that the family house market is moving while overall some parts of the country have strong buyer demand and a lack of suitable supply.
However, on average, properties are still coming to the market at slightly lower prices than a year ago. It’s one of the most price sensitive markets for years, according to Rightmove. Indeed, the fragility is shown by the latest Home.co.uk index which shows that the average asking price in England and Wales fell by 0.2% in the last year but were up 2.3% in Scotland and by a strong 5.6% annually in Wales.
But a breakdown of the figures shows that on a regional basis prices in England increased in most locations, but were down by 0.1% in the East of England, down by 0.2% in the North East and unchanged in Greater London.
The data also shows that the typical time on the market has increased considerably in some locations, most notably a rise of 38% in Greater London, a rise of 29% in the East of England and rise of 25% in the South West year on year while London supply dropped significantly again, down by 25% year on year and stock levels fell by 13% but the index reports suggests that this is paving the way for price recovery.
So, the market is ticking over even although a lot is going on the keep it subdued. But it is not enough to meet demand and a new analysis from Savills says that the target for England of 300,000 new homes a year by the mid 2020s will not be met unless the Government increases funding for affordable housing and moves away from an over reliance on private sales.
It points out that we have a slowing private market, tapering of the Help to Buy scheme and a potential Brexit downturn which will deepen the housing shortfall and that directly funding housing associations will be critical to closing this gap and delivering more affordable homes.
While new home completions look set to reach 260,000 homes per year by 2021, the report points out that longer term delivery remains decidedly uncertain. In a challenging market, house building in England may need to increase by up to a third between 2021 and 2025 to make up for the end of the current Help to Buy scheme and hit 300,000 homes a year.
As well as investment in affordable housing, the report calls for more joint ventures between the private sector, councils and housing associations, and increased use of long term funding models such as the strategic partnerships rolled out by Homes England and the Greater London Authority. The research shows this would help ensure new funding adds to overall delivery.
But there is optimism out there. The latest monthly report from the Royal Institution of Chartered Surveyors (RICS) shows that while demand from buyers remained in negative territory in March and sales and new property coming on to the market continued to decline, respondents still envisage a modest improvement in activity 12 months ahead.
However it is a case of no pain, no gain, with RICS saying that a modest fall in house prices at a UK level are expected over the next couple of quarters, although the regional picture remains mixed and sales are anticipated to rise over the next year.
We may all be bored by Brexit, but the likelihood is that it will still dominate the housing market and even we don’t leave until October then the bounce back is not unlikely until a year from now. If we leave in May then it will indeed come sooner. If we don’t leave at all expect a boom!
