Posts with tag: house prices

House price growth regained momentum in June, rising by 1.1%, according to the latest House Price Index from Nationwide.

June’s monthly increase reversed the previous three months’ declines.

Annual house price growth also rose over the month, from 2.1% to 3.1%.

The average house price in the UK stood at £211,301 in June, up from £208,711 in May.

Nationwide has also released its quarterly House Price Index, revealing that the gap in house price growth between the strongest and weakest performing regions in the second quarter (Q2) of the year is the smallest on record.

Q2 saw further convergence in regional house price growth. The gap between the weakest and strongest regions (in terms of annual price change) dropped to just four percentage points – a record low.

East Anglia was the strongest performing region in Q2, with average prices up by 5% year-on-year. London saw a notable slowing in growth, to 1.2%, and was the second weakest region in Q2, just above the north, at 1.1%.

Annual house price growth in Northern Ireland was stable, at 3.8%. Scotland experienced a slight softening in growth, to 1.7%, while Wales recorded similar levels to the previous quarter, at 1.4%.

House Price Growth Regained Momentum in June, Reports Nationwide

Average house prices in England fell by 0.3% during Q2, but were up by 2.8% over the last 12 months.

For the first time in eight years, house price growth in northern England (the West Midlands, East Midlands, Yorkshire and the Humber, the North West, and the north) exceeded that of southern England (the South West, outer South East, outer Metropolitan, London, and East Anglia). Northern England recorded a 3.3% annual rise, while prices were up by just 2.6% in the south.

Regional growth rates may have converged, but Nationwide continues to report significant disparities in price levels. This is particularly apparent when looking at prices relative to their 2007 peaks.

For example, prices in London are around 55% above their 2007 levels, while those in the north, Yorkshire and the Humber, and the North West are still below 2007 levels.

The Chief Economist at Nationwide, Robert Gardner, comments on the latest figures: “UK house prices rebounded in June, with prices rising by 1.1% during the month, erasing the decline recorded over the previous three months. However, monthly growth rates can be volatile, even after accounting for seasonal effects.

“The annual rate of house price growth, which gives a better sense of the underlying trend, continues to point to modest price gains. Annual house price growth edged up to 3.1% from 2.1% in May. In effect, after two sluggish months, annual price growth has returned to the 3-6% range that had been prevailing since early 2015.”

He continues: “There has been a shift in regional house price trends. Price growth in the south of England has moderated, converging with the rates prevailing in the rest of the country. In Q2, the gap between the strongest performing region (East Anglia, which saw 5% annual growth) and the weakest (the north, with 1% growth) was the smallest on record, based on data going back to 1974. Nevertheless, when viewed in levels, the price gap between regions remains extremely wide.

“London saw a particularly marked slowdown, with annual price growth moderating to just 1.2% – the second slowest pace of the 13 UK regions and the weakest pace of growth in the capital since 2012.”

Gardener explains: “The emerging squeeze on household incomes appears to be exerting a drag on housing market activity in recent months. The number of mortgages approved for house purchase has slowed a little in recent months and surveyors report that new buyer enquiries have softened.

“At this point, it is unclear whether the increase in house price growth in June reflects strengthening demand conditions on the back of healthy gains in employment and continued low mortgage rates, or whether the lack of homes on the market is the more important factor. While survey data suggests that new buyer enquiries have softened, it also indicates that this has been matched by a decline in new instructions. Indeed, the number of properties on estate agents’ books remains close to all-time lows.”

He looks ahead: “Given the ongoing uncertainties around the UK’s future trading arrangements, the economic outlook remains unusually uncertain, and housing market trends will depend crucially on developments in the wider economy.

“Nevertheless, in our view, household spending is likely to slow in the quarters ahead, along with the wider economy, as rising inflation squeezes household budgets. This, together with ongoing housing affordability pressures in key parts of the country, is likely to exert a drag on housing market activity and house price growth in the quarters ahead.

“However, the subdued level of building activity and the shortage of properties on the market are likely to provide support for prices. As a result, we continue to believe that a small increase in house prices of around 2% is likely over the course of 2017 as a whole.”

Hannah Maundrell, the Editor in Chief of money.co.uk, also responds to the data: “Looking at month-on-month changes to the housing market without factoring in annual performance can give us an unrealistic picture, because it’s partly reliant on which properties sold during the month. This could explain the turnaround Nationwide’s price index shows.

“The devil is in the detail however, and there are signs the property market is cooling slightly, with fewer people putting their property for sale and a drop in the number of people looking to buy. This is no great surprise; with the election thrusting us deeper into uncertainty, it’s sensible to be cautious.”

She adds: “If you’re looking to buy, the power is tipping in your balance, so make sure you do your research and haggle to get a price you’re happy with. If you’re selling, make sure the price you’re asking is realistic and be confident about the minimum you’re able to accept. If you want to sell at the top end of the price scale, you’ll need to make sure your home is better than anything else out there, and be prepared to wait for someone that wants to pay a premium.”

House prices rose by an average of 5.6% in the year to April 2017 – 1.1 percentage points higher than in the 12 months to March, show the latest official statistics from the Land Registry and Office for National Statistics (ONS).

On a monthly basis, prices rose by 1.5% in April, taking the average value across the UK to £220,094.

Regionally, the largest house price growth in April was recorded in the East of England (8.1%), while the lowest was in the North East (0.6%).

House prices increased by 4.7% in London in the 12 months to April – 1.5 percentage points higher than in the year to March. This is the first time in 11 months that the rate of price growth in the capital has risen.

House Prices Up on an Annual Basis in April, Show Official Statistics

These figures are consistent with data from the Royal Institution of Chartered Surveyors (RICS), which has reported negative price expectations in London for the 13 months to April 2017.

Looking at housing demand, RICS’s residential market survey for April shows that buyer enquiries remained low.

In April, the total number of seasonally adjusted property sales completed in the UK with a value of £40,000 or above rose by 20.3% compared with April 2016.

The unusually low level of transactions recorded in April last year was associated with the introduction of the Stamp Duty surcharge on additional properties. Comparing April 2017 to April 2016, sales fell by 3.2%.

According to the Bank of England agent’s summary of business conditions report for May, housing market activity was subdued on both the demand and supply side.

Regarding supply, RICS reports that new sales instructions remained negative for the 14^th consecutive month. It also states that average estate agent stock levels remain close to record lows. Furthermore, RICS claims: “An acute shortage of stock remains a key factor underpinning prices for the time being.”

The Founder and CEO of online estate agent eMoov.co.uk, Russell Quirk, comments on the data: “The latest Government data seems to portray a healthier market than other industry sources on the surface, with the monthly rate of growth bucking the downward trends seen in the previous month to climb 1.6%. That said, transactional volume was down on a month–on-month basis, and it is reported that both buyer and seller demand dwindled, no doubt a knee-jerk reaction to the news of a snap election.

“Although the events of the last year, particularly the changing political landscape, do not seem to have had a long-lasting detrimental impact on the UK property market, they have certainly stunted the rate of price growth.”

He adds: “Many UK homeowners and buyers for that matter would have been waiting for the election outcome to provide an air of stability in which to conduct their transaction. The reality, for the immediate future at least, will not provide that, and it is likely that the unpredictable swings in house price growth seen over the last few months will now persist for a while longer.”

The Senior Economist at PwC, Richard Snook, also says: “In the first set of numbers released since the General Election, the official ONS and Land Registry house price data showed that average UK house price inflation rose to 5.6% in the year to April, from an upwardly revised 4.5% in March (initially reported as 4.1%).

“This increase goes against the general pattern of slowing growth since summer 2016, as average UK prices leapt by £3,500 in the month, from £216,600 in March to £220,100 in April.”

Snook continues: “There was broad based strengthening across the regions – in particular, annual growth in London rose from 1.5% reported in March to 4.7% in April. Meanwhile, in Scotland, prices surged by £8,000, from £138,000 in March to £146,000 in April. This is the biggest monthly gain since this series began in 2005.

“These figures go against the recent trend of a Brexit-related slowdown that we predicted last year, but remain consistent with our guidance of 2%-5% growth in 2017 as a whole.”