House prices have flattened

May Summary

  • In May 2017, the average price of a property was £220,713.
  • The annual price change for a property was 5.8%, below the average of 4.7%.
  • The monthly price change for a property in the UK was 0.5%.
  • The monthly index figure for the UK, with January 2015 equalling 100, was 115.8.
The Royal Institute of Chartered Surveyor’s (RICS) conducted a survey for May 2017 reporting that price expectations remain moderately positive, but new buyer enquiries have decreased over the month. Statistics have shown that the number of seasonally adjusted property transactions completed in the UK with a value of £40,000 or above has increased by 13.4% since May 2016, however there was an unusually low number of transactions last year due to an introduction on higher tax rates for additional properties. Compared to the first month before this tax increase, April 2016, property transactions have fallen by 3.3% in May 2017.

House Price Changes

  • From the data gathered until June 2017, annual house price growth has fallen to 2.6%, the lowest rate of growth since May 2013.
  • House prices in the three months to June were 2.6% higher than in the same period a year ago.
  • Prices in the three months to April were 0.1% lower than in the preceding three months.
Historical Data 2

According to Halifax, house prices have flattened over the past three months following a huge period of uncertainty across the government. Overall, prices in the three months leading to June were marginally lower than the preceding three months, but the annual rate of growth has reached a low not seen for the past 4 years. Though employment levels are rising, customers struggle as the consumer prices grow faster than wages do. Combined with the new stamp duty on buy to let and second homes set up in 2016, there is a clear weakened housing demand in recent months.

Percentage Change

However, according to Nationwide, house prices have grown month-on-month by 1.1%, reversing the fall of the previous three months. Their recorded annual house price growth has risen to 3.1% compared to 2.1% in May 2017, and the gap between the strongest and weakest performing regions has narrowed to the smallest on record, though this is still an extremally wide margin despite this. After a sluggish two months, the annual price growth has returned to the 3%-6% range that has been prevailing since 2015.  In London, however, there has been a particularly noticeable slowdown as annual price growth is just 1.2%, the weakest pace of growth for the capital since 2012.

Such contrasting results shows an uncertainty regarding the industry at the current time as neither Halixfax nor Nationwide can predict how their prices will change over the next few months. eMoov founder and CEO, Russell Quirk, has seen the “Contrasting figures from Halifax after Nationwide reported signs of a pulse returning to the UK property market”, but believes that the market is not as volatile as many have claimed, saying that “It would seem reports of a market demise have clearly been exaggerated. Despite the recent claims that the market is due to see a notable crash with prices falling as much as 40%, this remains very unlikely. The market is not dead or running on the life support of easily obtained credit and has suffered more of a grazed knee than a fatal injury. A momentary blip is certainly not substantial enough to label a trend and those that have are doing so prematurely. Resilient levels of buyer demand, heightened by a paltry supply of stock and coupled with historically low interest rates will continue to fuel house price growth in the medium and long term.”

House Price Index

  • Newly-marketed property prices are at a standstill, up by only 0.1% (+£312) from June 2017 to July 2017.
  • The fundamentals remain solid with robust demand, low interest rates, and low unemployment.
  • Prospective buyers across the country are seeing the highest proportion of properties marked as sold than at any other time in the last 7 years.
  • Though we have seen 7.6% more sellers coming to the market in July 2017 than in July 2016, buyer choice is more restricted as supply fails to meet demand.
  • The annual price change, according to Rightmove, is a modest 2.8% with buyers very price wary and properties hitting their price ceiling.
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The summer holiday season generally leads to a dampening effect on prices and activity, and this month has seen property come to a virtual stop with a 0.1% rise from June 2017 to July 2017. This is still a stronger performance than we have seen recently, such as the 0.4% fall from May 2017 to June 2017. Interest and unemployment remains low on average, and demand for housing remains, in spite and indeed because of the shortage of available property for sale. Miles Shipside, Rightmove director and housing market analyst, comments that “Prices are in the summer doldrums. Sellers coming to market at this time of year have to price more keenly as the traditionally bubblier spring selling season is over and prospective buyers are distracted by their own summer plans.”

Russell Quirk also sees the data from Rightmove as a comfort, commenting that there are “Encouraging signs that seller interest has at least picked back up following June’s election. Although the current parliamentary situation is far from strong and stable, we’re already seeing election blues sidelined and the market return to a semblance of normality now that some of the dust of political uncertainty has started to settle.” Russell claims that a similar hangover was seen after the EU referendum last year, which saw house prices plummet by 0.9%, and that it took “a good month or two before kicking back into action. It is likely that, should these figures ring true, we could see a reverse in the cooling price trends reported over the last month or so, but heightened seller activity must be matched on the buyer’s side of the market in order for this to happen, otherwise we could see the reverse.”
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