Posts with tag: house prices

Property transactions were down across the whole of London, as well as England and Wales, in 2018, according to the latest Residential Index from London Central Portfolio (LCP).

The investment firm broke down the property markets across the country, into prime central London, Greater London, and England and Wales (excluding Greater London), looking at their performance during December 2018.

Prime central London

The average house price in prime central London (excluding new builds) in December was £1,844,031, following a month-on-month decline of 6.0%. On a quarterly basis, prices were down by an average of 10.2%.

Property transactions fell by 16.4% in the year to December, to a total of 3,514 – the lowest level recorded and a drop of over 46% on 2014.

The average new build house price in prime central London was £4,461,072 in December, representing a premium of 74.3% over existing stock. In the fourth quarter (Q4) of 2018, new build sales fell by 75.1%, to just 57.

Naomi Heaton, the CEO of LCP, says: “Whilst prices have increased marginally over the year, this is not a cause for optimism. It is attributable to greater activity at the higher priced end of the market, where the most significant discounts are available. This skews average prices upwards, but even this high-end effect is tapering off as activity stalls. 

“There were just 3,514 recorded transactions in 2018, fewer than 68 sales a week. This represents a fall of 16.4% over the year, and sales are now below the previous all-time low seen during the global financial crisis (GFC). There were just 57 new build transactions in the last recorded quarter. 

“The political turmoil the UK is currently weathering is being acutely felt throughout the country, but nowhere more so than in prime central London. With the Prime Minister’s deal being voted down and no clear cross party consensus, it appears we are now even further away from a post-Brexit road map. This continues to dampen investor sentiment. 

“However, from a buyer’s perspective, this period of low competition and suppressed prices is an excellent opportunity. The fundamentals that underpin the desirability of prime central London as a global destination have not changed. 

“Those who still believe in these fundamentals are able to acquire properties at material discounts, with the potential for significant uplift in the medium to long-term.”

Greater London

The average property value in Greater London ended 2018 at £619,888, following a quarterly drop of 1.1%. However, on an annual basis, prices were up by an average of 1.3%. 

Year-on-year, property transactions were down by 7.1%, to just 86,869 – the fourth consecutive decline. 

New build property transactions recorded greater decreases, of 19.1% over the year. The average new build house price was £698,485 in December – a 20.8% premium over existing stock.

Heaton comments: “Average prices for Greater London in December 2018 were £619,888, falling by 1.1% over the final quarter. This is lower than the average price seen in June 2017, when the Prime Minster held a snap general election. At the time, she declared that it was “the only way to guarantee certainty and security for the years ahead”. With the benefit of hindsight, this has not been the case. 

“The average price for the last 12 months to December was £615,625, representing annual growth of just 1.3% for 2018, the lowest level since the GFC. 

“Transactions for 2018 amounted to 86,869, a drop of 7.1% over the year. Sales in the capital have now declined for four consecutive years, amounting to a fall of 27%. 

“This decline coincided with the introduction of graduated SDLT [Stamp Duty Land Tax] and the Mortgage Market Review, which had a disproportionately negative impact in Greater London, where average house prices are significantly higher than the UK as a whole. 

“More recent political and economic events have added more fuel to the fire, and there are very few signs that this is likely to change. With Brexit looming, the property market is desperate for some positive news to restore confidence.”

England and Wales (excluding Greater London)

Across England and Wales, the average house price in December stood at £262,126. This followed a monthly increase of 1.3%, but a quarterly decline of 0.7%. Year-on-year, the average property value was up by 2.8% – the lowest level of growth since 2013.

Annually, property transactions decreased by 3.7%, which marks the greatest drop since 2008, to hit 783,913.

New build sales stood at 93,619 in December, following a yearly rise of 3.6%. The average new build house price ended the year at £299,617, representing a 14.8% premium over existing stock.

Heaton says: “Transactions for 2018 stood at 783,913, a drop of 3.7% over the year. This is the largest annual fall since the GFC as a wait-and-see attitude towards moving house or investing becomes ever more prevalent. 

“Whilst transaction levels have fallen ever since the introduction of additional rate Stamp Dutyin 2016, undoubtedly the uncertainty around Brexit is having a far more punitive effect than increased buying costs. This negative sentiment has also spilled into the new build market, where growth in annual transactions is just 3.6%. 

“With no positive news of late, coupled with the infighting within the parties and Government, it is difficult to foresee any significant changes to current market sentiment. Unity and clarity would now go some way to restoring confidence, not only to the property market, but to all facets of UK enterprise.”

Average house price growth picked up to 2.8% in the year to November 2018, according to the latest official figures from the Office for National Statistics (ONS).

This rate of growth is up slightly from the 2.7% recorded in October 2018.

Over the past two years, there has been a slowdown in UK house price growth, driven mainly by a decline in the south and east of England.

The lowest annual growth rate was recorded in London in November, where prices fell by an average of 0.7% over the year, which is unchanged from the previous month.

The average UK house price in November was £231,000. This is £7,000 higher than in the same month of 2017. On a non-seasonally adjusted basis, the average house price in the UK dropped by 0.1% between October and November, compared to a decrease of 0.3% during the same period of the previous year.

On a seasonally adjusted basis, the average house price in the UK increased by 0.1% between October and November 2018.

House prices in England grew at a slower rate than the other countries of the UK in November last year, by an average of 2.6% over the year. This is up from 2.3% in the 12 months to October, with the typical property value in England now at £247,000.

In Wales, the average house price rose by 5.5% over the same period, to reach £161,000. Scotland’s average property value was up by 2.9% in the year to November, taking it to £151,000.

In Northern Ireland, the average house price increased by 4.8% in the year to the third quarter (Q3) of 2018, taking the typical property value to £135,000.

Across the English regions, the West Midlands recorded the highest annual growth in November, at an average of 4.6%. The East Midlands followed this, at 4.4%.

The English region with the slowest annual growth was London, where prices fell by an average of 0.7% in the year to November. House prices in the capital dropped each month of last year from July onwards.

The Bank of England’s November inflation report highlighted that the slowdown in the London market since mid-2016 is likely due to the region being disproportionately affected by regulatory and tax changes, and also be lower net migration from the EU.

While house prices in the capital fell over the year, the region remains the most expensive place to buy a home in England, at an average price of £473,000. The South East and East of England follow this, at £324,000 and £295,000 respectively.

The North East continues to hold the lowest average house price, at £132,000, and is the only English region yet to surpass its pre-economic downturn house price peak.

Comments

Steve Seal, the Director of Sales and Marketing at Bluestone Mortgages, says: “With the new year underway, buyers will be hoping that 2019 brings with it a more promising housing market. Although today’s statistics reveal a slowdown in house price growth, which will be of benefit to first time buyers, there are still financial barriers preventing access to lending. The lack of affordable housing and the time taken to save for a deposit are only a few.

“Whilst traditional high street lenders remain dominant in the mortgage market, specialist lenders are becoming more and more popular with consumers. Unlike high street lenders, specialist lenders can cater to a much wider range of customers, including those whose finances may have taken a bump. A flexible approach allows an individual’s financial background to be understood, rather than just being seen as a credit number.” 

John Goodall, the CEO and Co-Founder of buy-to-let specialist Landbay, also comments: “These figures are likely to be a slight reprieve for Brexited-out homeowners, unable to face more uncertainty-linked price turbulence. Looking into the detail, rising prices in the north have helped bridge some of the gap between those in London. Homeowners in the capital have been impacted by the upper Stamp Duty threshold, limiting their ability to move.

“There’s no escaping the fact that confidence in the market is low, bogged down by Brexit and economic uncertainty. However, these figures point to an opportunity for those in a position to buy. The combination of low prices, solid wage growth and attractive borrowing costs often proves to be too difficult to resist.”

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, gives her thoughts: “London is feeling the strain, as affordability continues to eclipse lack of supply. This latest episode of the Brexit horror show last night could easily be the straw that breaks its back and increase the capital’s rate of descent.

“London has been managing to stay within reach of break even, but that could now change.

“The most surprising shift in these statistics is in the North East, an area that has seen its annual growth rate rise from a 0.1% fall to a 4% rise in just one month, leaving London once again the only area to be falling year-on-year.

“In these latest Land Registry figures for November, it’s still true that the further you get from Brussels, the more buoyant the market. But it’s not a case of out of sight, out of mind. These areas are still way behind London and the south in terms of capital values, and so prices can still advance while they remain realistic in those markets.

“In pure growth terms, the north, Midlands, Scotland and Wales are the engines pulling us along at the moment, while London rides on its axle. It’s clear that in the south and South East, lack of supply is being overcome to a larger degree by affordability.

“Outside the North East, the price movements we’re seeing are still quite gentle, given we are close enough now to feel a no deal Brexit’s hot breath on our necks. There is no real recovery in site for the capital over the next three months.

“People have even started talking about playing the market, which, for traditional owner-occupiers, simply means selling and renting for a while before buying back in. It is possible to make considerable amounts of money doing this, but getting the timing right is near impossible, and more a matter of luck than judgement. I wouldn’t do it — and I own an estate agent.”

Shaun Church, the Director at mortgage broker Private Finance, says: “As we continue to approach March 29^th with no clearer picture as to how the UK might look outside of the EU, property prices are continuing to take a hit, with many prospective buyers and sellers at risk of following politicians’ lead by becoming paralysed by uncertainty.

“The impact of Brexit on the UK property market is likely to rumble on far past the date of the UK’s official departure, as we wait to see what the true effect of the UK’s exit means for property values and the wider economy. But, while current homeowners may be stuck in a holding pattern for now, this flat market marks a time of great opportunity for first time buyers.

“With property prices easing, current market conditions mean that, for many, purchasing a first home is at its most affordable level in recent years, thanks to near-record low mortgage rates, Stamp Duty exemptions and modification of lending criteria.”  

Nationally, average house price growth slipped to just 0.2% in the year to January, as negative sentiment weighs on vendor expectations, according to the latest report from Home.co.uk.

The largest price decline was recorded in Wales, at an average of 1.1%, which is the first indication of more cautious pricing in this market.

On a monthly basis, the average house price in England and Wales dropped again, by 0.5% between December and January.

The property market’s downturn is continuing to steepen as we enter 2019. Prices are still coming down in London, the South East and East of England. In fact, the rate at which prices in these regions are correcting is increasing.

London’s losses over the past 12 months have now extended to 3.2%, or around £17,000, for the average property. Further erosion of asking prices in the South East and East has now precipitated losses of 1.9% and 0.8% respectively.

The South West has become the next domino to fall, as the price correcting phase of the property cycle sweeps west and north, out from London. Joining England’s three most populous and expensive regions (Greater London, the South East and East of England), the South West is now the fourth region where growth has become negative year-on-year.

Together, these four regions account for around half of the UK’s housing stock. Going forward, their combined effect on the national average growth figures will be adverse, Home believes.

However, significant market vigour is still apparent in some regions, and support for headline growth is nowhere more prevalent than in Wales and the West Midlands, where asking prices are 5.7% and 5.1% higher than they were in January 2018.

The North West, and Yorkshire and the Humber have pushed up their average asking prices by 4.5% and 4.1% respectively over the past year.

Price growth in the East Midlands stalled in early summer last year, and the market is still slowing, as evidenced by the average time on market increasing. Supply in the region is currently up by 5%, and Home expects this to rise further over the coming months, as investors attempt to cash in.

This would be consistent with market behaviour observed previously when the East and South East markets peaked.

The average time on market continues to rise in London (8%), the South East (12%) and East of England (10%) annually, leading to further vendor frustration and price cutting. Across England and Wales, the typical time on market has hit 111 days, which is four days longer than in January last year.

16.9% more properties were reduced in price while on the market last month, compared to the same month of 2017.

Overall, the supply of properties for sale in the UK rose by 3% in the year to January, while the total stock for sale was up by 11.4%. However, large surges were recorded in the West Midlands (18%) and East of England (11%).

Meanwhile, double-digit rent price growth in several London boroughs indicates the first green shots for the capital’s housing market, as rental yields rise.

Annual house price growth has dropped from an average of 2.6% in December 2017 to just 0.5% in the same month of last year, according to the latest House Price Index from Nationwide.

In December, annual house price growth fell to an average of 0.5%, from 1.9% in November. Month-on-month, the typical property value decreased by 0.7%, taking the average price to £212,281.

Robert Gardner, the Chief Economist at Nationwide, says: “UK house price growth slowed noticeably as 2018 drew to a close, with prices just 0.5% higher than December 2017.

“This marks a noticeable slowdown from previous months, where prices had been rising at a c.2% pace. However, it is broadly in line with our expectations (since the start of the year, we had been anticipating a price rise of c.1% in 2018).”

He continues: “Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchases, have remained broadly stable in recent months, but forward-looking indicators had suggested some softening was likely.

“In particular, measures of consumer confidence weakened in December, and surveyors reported a further fall in new buyer enquiries towards the end of the year. While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers.”

Uncertainty dragging the market

Gardner looks at the causes of the decline: “It is likely that the recent slowdown is attributable to the impact of the uncertain economic outlook on buyer sentiment, given that it has occurred against a backdrop of solid employment growth, stronger wage growth and continued low borrowing costs.

“Near-term prospects will be heavily dependent on how quickly this uncertainty lifts, but, ultimately, the outlook for the housing market and house prices will be determined by the performance of the wider economy – especially the labour market.”

He points out: “The economic outlook is unusually uncertain. However, if the economy continues to grow at a modest pace, with the unemployment rate and borrowing costs remaining close to current levels, we would expect UK house prices to rise at a low single-digit pace in 2019.”

Mixed picture across regions

Gardner assesses the markets in regions across the UK: “Amongst the home nations, Northern Ireland recorded the strongest growth in 2018, with prices up 5.8%, though Wales also recorded a respectable 4% gain. By contrast, Scotland saw a more modest 0.9% increase, while England saw the smallest rise of just 0.7% over the year.

“One of the more prominent regional trends in 2018 was the further narrowing of the north-south house price divide in England. Price growth in the south (London, Outer Metropolitan, Outer South East, East Anglia, South West) moderated throughout the year, while, in the northern regions (the North, North West, East and West Midlands, and Yorkshire and the Humber), price growth remained broadly stable in the 3% to 4% range.”

He isn’t surprised to have seen this: “This trend was not entirely unexpected, however, as it followed several years of sustained outperformance by the south (especially London and Outer Metropolitan), which left affordability more stretched in these areas.

“Indeed, even though house prices have been rising more quickly in the north of England since Q2 [the second quarter of] 2017, price levels are still significantly higher in the south. The price of a typical home in the south of England (£329,240) is still almost double that in the north (£166,642).”

Quarterly house price growth

Alongside its monthly data for December 2018, Nationwide has released its latest quarterly house price statistics, for Q4 2018, covering the three months to December.

Regional house price performance was slightly more varied over 2018, compared to 2017, although, outside of London and the South East, all regions continued to record annual house price growth.

Northern Ireland saw a noticeable pick-up in price growth and was the top performing region of 2018, at an average increase of 5.8%.

Wales also outperformed the UK average, with prices up by 4% over 2018 (compared to a 3.3% increase in 2017). Meanwhile, price growth in Scotland remained relatively subdued, with an average year-on-year rise of 0.9%.

The Outer Metropolitan was the weakest performing region, with prices down by an average of 1.4% over the year. London also continued to see modest price falls, with values decreasing by 0.8% during 2018 (the sixth consecutive quarter in which the capital has recorded an annual house price decline).

The average house price in England fell by 0.1% quarter-on-quarter in Q4 2018, with values up by 0.7% over the year as a whole.

For the second year running, price growth in northern England exceeded that in southern England. While most regions saw a softening in price growth in Q4, overall prices in northern England were up by 3% annually.

Meanwhile, in southern England, both London and the Outer Metropolitan regions continued to see prices decline year-on-year, leading to a slight overall decrease in the south, of 0.2%.

However, looking at price levels relative to 2007 peaks, there is still a significant divide. In Yorkshire and the Humber, the North West and North, prices are still close to 2007 levels, while, in London, they are more than 50% higher.

Comments

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, comments on the report: “Britain’s almost back to square one, as Brexit delivers a lost year.

“The Nationwide’s annual prediction wasn’t anything to write home about, but the UK has still undershot that by half. House prices soldiered on throughout 2018, and then threw their arms up and crawled over the line with just yards to go.

“Brits’ attitude to the market this year has been mixed, with plenty of twists and turns, but, ultimately, the big picture has come home to roost. You can thank politicians for that. Forward guidance from the Bank of England has been at a historical high, but Brexit is the spook that just won’t allow confidence to rise to more than a slow walk.

“A slew of buyer incentives has still resulted in a market at a virtual standstill. It’s hard to imagine what would have happened without them. The UK would certainly have found itself taking a big backward step. This is going to put incredible pressure on those in power to keep greasing the wheels with Stamp Duty reliefs and Help to Buy, even though many believe they are counterproductive and slightly dangerous ways of fanning the flames of house price growth in the long-term.”

Kevin Roberts, the Director of Legal & General Mortgage Club, also says: “Throughout 2018, there was a steady slowdown in annual house price growth. Rather than the 4-5% rises of the past, October saw house price inflation fall to just 1.6%. This sustainable growth has helped aspiring homeowners, with recent figures showing more first time buyers climbed onto the property ladder in the past year than any other time since 2006.

“Innovation in the mortgage market is also helping, giving borrowers a greater choice of products than ever before, and schemes that help younger buyers, like Help to Buy and Shared Ownership, continue to support those who cannot rely on a bank of mum and dad.

“Despite wider political uncertainty, as we enter 2019, there is clearly a lot to be cheerful about in the housing market and we hope to see even an even greater number of buyers take their first steps onto the ladder.”