Posts with tag: housing market

Annual house price growth increased to 6.5% in the three months to December 2016, according to the latest House Price Index from Halifax.

This marks the second consecutive increase in the annual rate of growth, from a 2016 low of 5.2% in October and up from 6.0% in November. Despite the rises seen in November and December, however, the annual rate remains significantly below the 10.0% peak reached in March 2016.

At the end of last month, Halifax reported that Luton experienced the strongest annual house price growth of the year, at 19.4%.

On a quarterly basis, prices in the last three months of the year were 2.5% higher than in the previous quarter. This compares to the 0.9% change recorded in November. The quarterly rate of growth seen in December was the highest since March 2016, when it stood at 2.9%.

Following a month-on-month increase of 1.7% between November and December – the fourth consecutive monthly rise – the average house price across the country was £222,484.

Annual house price growth

Annual House Price Growth Increases to 6.5%, Reports Halifax

A Housing Economist at Halifax, Martin Ellis, says: “House prices finished 2016 strongly. Prices in the final quarter of the year were 2.5% higher than in the previous quarter. The annual rate of growth increased, rising for the second consecutive month, from 6.0% in November, to 6.5%.

“Slower economic growth, pressure on employment and a squeeze on spending power, together with affordability constraints, are expected to reduce housing demand during 2017. UK house prices should, however, continue to be supported by an ongoing shortage of property for sale, low levels of housebuilding and exceptionally low interest rates. Overall, annual house price growth nationally is most likely expected to slow to 1-4% by the end of 2017. The relatively wide range for the forecast reflects the higher than normal degree of uncertainty regarding the prospects for the UK economy this year.”

2016 housing market activity 

Total UK home sales for 2016 are expected to be broadly unchanged form 2015 and 2014, at 1.2m. Sales largely stabilised in the second half of the year, with a 1% increase between October and November. Purchases in the three months from September to November were, however, 9% lower than in the same period of the previous year.

Mortgage approvals were 6% higher in the three months to November compared to the preceding three months. The number of mortgage approvals for house purchases – a leading indicator of completed property sales – slightly increased (0.2%) on a monthly basis from October to November, following a 6% rise between September and October. This suggests that home sales could increase over the coming months.

Nevertheless, supply remains incredibly low, and there are no signs that the shortage of stock is easing. The number of new instructions for November was flat, with the amount of unsold stock at a record low.

The CEO of online estate agent eMoov, Russell Quirk, comments on the data: “A late flourish for the UK housing market at the end of 2016 sees price growth remain strong, which will be welcomed by UK homeowners. It would seem positive news on house prices simply will not go away, despite the efforts of some to make us accept that the market will weaken in the wake of EU referendum angst.

“As we have said time and again, the UK housing market is fundamentally robust, bulletproof even, and we do not subscribe to the view of the naysayers that we will see price reductions in 2017. The clever money, given today’s numbers, is yet more positive news, which will serve to underpin the overall economy this year.”

He adds: “Low money costs, a demand led by an aspirational home owning culture and scant supply, will all ensure that property prices remain buoyant, regardless of those using falling prices as a scare tactic for their own personal agenda.”

Ian Thomas, CEO and co-founder of LendInvest, also responds: “While the property market proved resilient towards the end of the year, 2017 will likely see a slowdown in growth, as the impact of last year’s Stamp Duty changes are felt by investors, and the Government begins to negotiate the UK’s withdrawal from the EU.”

Annual house price growth across the UK was stable at the end of 2016, standing at 4.5% – the same as 2015 – according to the latest House Price Index from Nationwide.

The study also shows that annual house price growth in London ended the year below the UK average for the first time in eight years.

Following a 0.8% monthly increase in values, the average property price ended the year at £205,898.

Annual house price growth

The Chief Economist at Nationwide, Robert Gardner, comments on the findings: “The story of UK house price growth in 2016 was one of relative stability. Annual house price growth ended 2016 at 4.5%, the same as the rate recorded in 2015.

“There were signs that London’s significant period of outperformance may be drawing to a close. For the first year since 2008, annual house price growth in the capital was lower than the UK average, with prices increasing by 3.7% over the year, down from 12.2% in 2015.

“The south of England as a whole continued to see slightly stronger price growth than the north of England, though the differential narrowed.

“Price growth in Wales, Scotland and Northern Ireland remained subdued, though each saw small gains overall in 2016.”

Outlook for 2017

Annual House Price Growth Stable at the End of the Year

Sharing his predictions for the coming year, Gardner says: “Looking ahead to 2017, house price prospects will depend crucially on developments in the wider economy, around which there is a greater degree of uncertainty than usual.

“Like most forecasters, including the Bank of England, we expect the UK economy to slow modestly next year, which is likely to result in less robust labour market conditions and modestly slower house price growth.

“But we continue to think a small gain – around 2% – is more likely than a decline over 2017 as a whole, since low interest rates are expected to help underpin demand, while a shortage of homes on the market will continue to provide support for house prices.”

Affordability across the UK

He also addresses the striking differences in affordability across the UK: “There has been a marked divergence in house price growth across the UK in recent years, which has translated into a significant difference in affordability across the regions.

“We used regional income data to estimate where in the income distribution a prospective purchaser would lie if they were purchasing the typical first time buyer property in a region, had a 20% deposit and were borrowing four times their (single) income.

“The differences are striking. In Scotland and the north of England, this typical buyer would lie in the 30^th income percentile, while in the South West they would be at the 75^th percentile and above the 90^th percentile in London.

“This picture has shifted over time. In particular, the dispersion or variation in affordability across regions has increased over the past ten years.”

He continues: “Affordability has improved in Scotland, the north, East Midlands and Northern Ireland over the past ten years. By contrast, in London and the south of England, more people have found themselves priced out of the market or had to borrow a greater multiple of their income, though low interest rates have helped to reduce monthly mortgage costs.

“This pattern is reflected in median loan to income (LTI) ratios for first time buyers across the regions. Median LTI ratios are highest in London and the South East (at around four times income) and lowest in Northern Ireland (at less than three).

“As you might expect, there is a strong relationship between affordability in a region and how much first time buyers borrow relative to their income. As affordability becomes more stretched (as measured by higher house price to earnings ratios), the more first time buyers borrow relative to their income.”

Top performing region of 2016 

All regions recorded annual house price growth in 2016, with East Anglia topping the chart for the first time since 2010, with average values up by 10.1%.

London experienced a further moderation in the annual rate of price growth, from 7.1% in the third quarter (Q3) to 3.7%. This is the first time since 2010 that London has not ended the year as the strongest performing region and the first year since 2008 that it has been below the UK average.

The north was the weakest performing area, with prices little changed over the year.

Wales recorded a slight uptick in the rate of growth compared to the last quarter, with a 2.4% annual rise. Scotland remained fairly subdued, with prices up by just 2.2% over the year, although this was an improvement on 2015, when Scotland was the only region to see price declines.

The annual rate of growth in Northern Ireland slowed to 0.7%, from 2.4% in the previous quarter.

The average house price in England rose by 0.8% in the final quarter of 2016, and was up by 5.1% over the whole year.

Most southern regions of England, with the exception of East Anglia, experienced a further slowdown in annual price growth compared to Q3. Overall, prices in southern England (the South West, outer South East, outer Metropolitan, London and East Anglia) were up by 5.5% over the year, while in northern England (West Midlands, East Midlands, Yorkshire and the Humber, North West and north), prices increased by 3.8%.

However, in cash terms, the gap in average prices between the south and the north continued to widen, now standing at over £170,000 – around £11,500 higher than a year ago.