Week in and week out we are getting some fabulous data from our research experts around property price growth, and the latest information I saw was a superb presentation from Aneisha Beveridge at Hamptons.

One of the trends that I’ve been suggesting over the last decade is that with price growth slowing over the long term, this must be impacting people’s ability to move as they aren’t securing as much equity as they have in the past.

This chart from Aneisha has answered my theory with facts – and what’s interesting is that it depends on whether people have bought a house or a flat. The chart shows that going back 20 years, flat owners’ equity hasn’t increased anywhere near as much as that of those with houses.

As many first-time-buyers purchase a flat to get on the ladder, this means it is going to be much harder for them to trade up to a house – especially with the more difficult mortgage constraints introduced in 2014.

Regional differences

What’s even more interesting is looking at this data on a regional basis. One of the areas I think is of most interest to study is the North East, mainly because it doesn’t have the price growth of other regions. One of the main reasons for this is that the population is pretty static, and there is plenty of land to build on, so matching supply and demand is much easier than in most other regions.

However, you can see from the chart that equity growth over the last few years has been better, and indeed, that is likely to have fed into slightly better property price growth in the North East region than others we have recorded.

It’s also interesting to see that the more ‘expensive’ areas such as London, the East, and the South East are declining in property equity earnings, which translates into lower house price growth.

So it appears we are in a period of continued lower house price growth. That’s because what’s preventing prices from rising as much as in other areas (and in the past) is that because prices haven’t gone up as much, people don’t have more equity to boost the price of the next property they trade up to, coupled with the difficulties of bridging the gap due to increased mortgage costs.

The chart also shows that in areas like London, property prices and, therefore, the gain in equity have really held back price rises. London sellers were doing pretty well in 2019, but as price growth has been constrained, especially for flats and first-time-buyers, the equity that they have to put towards their next home is not just limiting first-time buyers’ purchase ability, but also those trading up and down, especially if they are facing a loss on their home due to the falls seen since 2022 in some areas.

Slower property price growth while wages rise at a faster pace than they have in the past decade can only be a good thing as it helps to improve affordability – especially if we can see bank base rates fall back to 4%, which should deliver a more healthy property market.