Rightmove: “Price of property coming to market reaches record high.”
NAEA Propertymark: “A buyer’s market in March as a record number of homes are sold for less than asking price.”
RICS: “Price balance dips but demand and sales stabilise.”
Nationwide: “Small uptick in annual house price growth.”
Halifax: “Annual house price growth at 2.2 per cent.”
LCPAca Residential Index: “England & Wales sees fourth consecutive quarterly fall in prices and transactions.”
Hometrack: “UK city house price inflation running at 5.5 per cent, up from 3.7 per cent a year ago.”
Average prices across the indices vary from mortgaged only prices from the Nationwide HPI (Apr 18) of £213,000, through to marketing prices (ie not necessarily sold) from Rightmove (Apr 18) of £305,732, and actual prices from LSL Acadata HPI of £301,490 – a 43 per cent difference. Average sold prices from the UK HPI stand at £225,047 (Feb 18).
My fear is market stagnation, so it’s vital that the industry explains the realities of buying and selling in this period.
Kate says: The Halifax index has driven the headlines so far this month with a ‘scary’ 3 per cent fall in prices from March to April, despite the fact that they carefully reported that prices were still up by 2.2 per cent year on year following a big rise in the previous month. But hey, everyone loves a scary ‘house price headline’…don’t they? I don’t think so, especially when this is a clear case of ‘don’t panic’. Despite this, the report sparked headlines of “UK house prices register a drop as sluggish market continues” and “Housing prices drop by 3 per cent”. From an agent, broker, surveyor and legal company’s perspective, now is the time to share your long-term market expertise with clients to avoid this turning into people ‘panicking’. We all know that economically there is no reason for the market to ‘crash’ and it is merely adjusting – in some areas. However, this is a market heavily influenced by people’s confidence. What’s more interesting in the Halifax index is that their ‘confidence tracker’ suggests that people are nervous about buying and selling, coupled with the even more worrying headline from BT announcing huge job losses. If there are more news stories about unemployment, even things like potential conflict post Trumps decision to pull out of the Iran deal, coupled with little change to people’s wages versus inflation, then people can be easily spooked just now and decide to ‘stay put’. My biggest fear continues to be for market stagnation, so it’s essential that the industry guides and explains the realities of house buying/selling throughout this period of uncertainty.
Kate says: For once, it’s not England that is topping the table of year on year growth. Scotland is seeing a mini ‘boom’ while Wales and Northern Ireland are both growing at a faster rate than England, which is being dragged down by London, the South and East Anglia property price growth engines basically being ‘turned off’ post double digit growth since 2013. However, although Scotland and Wales have now (just) recovered their prices on a nominal basis to the heights achieved before the credit crunch, Northern Ireland still remains in ‘burst property price bubble’ territory, with average prices still 42 per cent lower than 10 years ago. Add the impact of inflation and the real fall in value of property in NI is frightening. Anyone buying at the ‘average’ of £224,670 would need the property to be worth £286,500.89 in today’s money, just to ‘stand still’, whereas it’s actually worth nearly 70 per cent below that amount.
There’s great news on a regional basis, just one region left to recover from the credit crunch in nominal terms with the North West and Yorkshire and Humber region now recovering prices to pre-recession heights. This leaves the North East to find an 8 per cent recovery.
RICS: “Prices continue to fall in some parts, with London and the South East in particular showing further weakness, and the net balance turned marginally negative in the South West for the first time since May 2013. By way of contrast, house price inflation remains firm in Northern Ireland and Scotland.
“Virtually all areas of the UK exhibit comfortably positive twelve month price expectations. On the same basis, expectations remain downbeat in London.”
Hometrack: “The annual rate of city house price growth ranges from +8.1 per cent in Edinburgh to -6.6 per cent in Aberdeen with Cambridge the only other city registering nominal price falls (-1.2 per cent). Cardiff, Leeds, Newcastle and Sheffield have all recorded a sustained upward shift in the annual rate of growth over the last 12 months. Capital growth in these cities has under-performed that recorded across the larger regional cities over the last two years. The increased rate of growth is a result of rising demand and a lack of housing for sale.
Great news for England, just one region left to recover from the credit crunch in nominal terms, with the North West and Yorkshire and Humber regions now recovering prices to pre-recession heights.
“Price inflation in London remains positive at +1.6 per cent with no sign of this shifting into negative territory in the near term. Capital values have registered a small increase (0.9 per cent) over the last quarter suggesting some easing in the downward pressure on prices. House price growth at a local authority level across London reveals a stabilisation in the rate of growth with prices changes over the last quarter remaining unchanged or improving modestly.”
Kate says: The research on towns and cities reveals some interesting stats. For London, Oxford, Cambridge and Reading the huge 40 per cent+ growth they have seen in the last 10 years means that they have hit ‘affordability buffers’ and where it’s tough for buy to let investors to get deals to stack up under the harsher tax regime. However, for somewhere like Bradford and Belfast to only see small levels of capital growth year on year and still be way behind prices reached over a decade ago, it’s tough to see whether these areas will see a recovery or in the future be seen as areas where the property price bubble has truly burst.
In contrast. areas such as Brighton and Hove, Bristol and Milton Keynes are not only up 40 per cent+ in the last 10 years, but are still rising at 4 per cent or more year on year. It’s likely that this is down to economic and income/wealth conditions in those individual areas. What we will have to wait and see though, is what the headlines bring over the coming months to see if, despite the economic conditions to buy being good, whether confidence will further subside.
LCPAca Residential: “Quarterly transactions have fallen by 15.4 per cent, again the fourth consecutive reduction. This does not paint an encouraging picture for the UK housing market as a whole. It highlights that the government’s attempts to increase transactions with help to buy schemes and stamp duty exemptions are not proving very effective.”
NAEA Propertymark: “Despite sales to FTBs rising last month following the Chancellor’s introduction of stamp duty relief for those purchasing their first homes, sales to the group fell from 29 per cent February to 26 per cent in March.
“The average number of sales agreed stayed the same in March – with eight recorded per branch.” (Mar 18)
Bank of England: “Mortgage approvals were broadly unchanged on the month. Within this, approvals for house purchase were slightly lower at 62,914.” (Mar 18)
UK Finance: “There were 25,200 new first-time buyer mortgages completed in February 2018, some 2.4 per cent more than in the same month a year earlier. The £4bn of new lending in the month was 2.6 per cent more year-on-year. The average first-time buyer is 30 with a gross household income of £41,000.”
PROPERTY DEMAND AND SUPPLY
RICS: “New buyer enquiries were more or less unchanged during April, arresting a sequence of four straight months in which they had declined fairly sharply. That said, although demand was not reported to have declined in the latest results, it has now been thirteen consecutive months since this indicator was last positive. Alongside this, new instructions continued to decline, albeit the net balance of -7 per cent represents the least negative reading since last September. Consequently, average stock levels on estate agents’ books were essentially unmoved, standing at 42.2 and still within a whisker of the all-time low set back in February of this year.”
Kate says: Just as with house prices, transaction levels are seeing regional differences. London topping the charts seeing falls of around 13 per cent 2017 vs 16, with East Anglia and the South East seeing falls, although at almost half this level. It’s surprising to see some falls in the Midlands, bearing in mind they both did well price wise in 2017, but with all areas seeing static or falling sales, the next six months ‘news’ will be critical to the property market as to whether it will slow even further, or perhaps pick up post the summer if people retain a level of confidence in the economy and the market. However, there will always be pockets in local areas of good transactions versus poor and it is vital that local industry experts work with the media to give the real market picture for different areas and property types.