The January Index from the Halifax indicates that house price growth continued to accelerate in Britain during the last three months.
Data from the report shows that house values rose by 2.2% in the period, taking the average value to £212,430. Prices were also found to be up 9.7% year-on-year and by 1.7% compared to December 2015.
Upward pressure
Martin Ellis, Housing Economist at the Halifax, said that the quarterly increase followed two months of below 2% rises.
‘The imbalance between supply and demand continues to exert significant upward pressure on house prices,’ Ellis noted. ‘This situation looks set to persist over the coming months. Further ahead, increasing affordability issues, as price increases continue to exceed wage growth, are likely to curb housing demand and cause price growth to ease.’[1]
Mr Ellis went on to say that confidence in market remains strong, according to the most recent Halifax Housing Market Confidence Tracker. The final quarter of 2015 showed that a majority of people believe that typical property values will be higher in twelve months time.
Supply shortage
An increase in price growth is being driven by a lack of supply, according to Randeesh Sandhu, Chief Executive Officer of finance provider Urban Exposure. Sandhu also noted that the lack of housing supply is due to developers having a lack of skills and key materials.
‘Far more needs to be done to boost development, particularly in London where average house prices in over half of London neighbourhoods are now £500,000 or more,’ he observed.[1]
Rob Weaver, director of Investments at property crowdfunding platform Property Patner, agrees with Sandhu’s observation. He also said that sales in central London continue to drop off, but those in the outer boroughs are thriving.
‘Potential buyers are hunting for more affordable housing, attracted by regeneration in places like Thamesmead and Woolwich and of course, Crossrail,’ Weaver said. ‘We’re also seeing a spike in activity in the market as buy to let landlords rush to seal deals before the stamp duty 3% hike in April.’[1]
House price growth rises again
Rush
‘Britain simply can’t build homes fast enough to keep up with demand,’ observed Jonathan Hopper, Managing Director of Garrington Property Finders. ‘With demand likely to be boosted even further by the Bank of England’s admission that an interest rate rise could remain firmly off the table for the rest of the year, 2016’s strong start is unlikely to be a blip.’[1]
Mark Posniak, MD of Dragonfly Property Finance, believes that further house price growth is almost inevitable. He said, ‘with interest rates unlikely to move for some time and people generally confident about their jobs and the economy, demand is also very strong. People’s fear of being priced out of the market is tangible at present. This is especially the case in London and the South East.’[1]
‘While logic suggests house price growth will ease as affordability issues increase, our relationship with the property market is nothing if not emotive. Prices rise in this way only adds to demand and so the growth continues,’ he added.[1]
[1] http://www.propertywire.com/news/europe/uk-house-price-index-2016020411522.html