House prices across the UK fell 0.2 per cent in the three months to April, the largest decrease since November 2012, according to the latest Halifax house price index figures.
One economist put the apparent ‘stagnation’ down to the “deterioration in housing affordability” brought about by the sustained rise in prices between 2014 and 2016. A decline in job creation and the “beginnings of a squeeze on households’ finances” were also cited as factors.
However, alongside this the report stated that low mortgage rates and the ongoing shortage of property were likely to ‘underpin house prices over the coming months’ and in fact, compared with the same quarter a year ago, the data shows a 3.8 per cent rise in house prices annually.
Although regional figures are not currently available, anecdotal evidence suggests that prices for residential and commercial property outside areas of central London remain relatively strong.
CONFIDENCE IN NORTHERN CITIES
There is a growing confidence in the market in places like North Yorkshire, where hundreds of jobs are set to be created at Sirius Minerals’ 2.3 billion potash mine, whilst at Britain’s biggest port complex at Hull and Immingham, £50 million is being invested amid expectations of an increase in UK trade following Brexit.
Meanwhile, house prices in Newcastle have risen 5.6 per cent in the year to March and a recent UK Powerhouse report predicts the city’s economy will grow by 14.5 per cent in the next decade, again suggesting sustained growth in property prices.
Newcastle house prices rose 5.6% in the year to March and a report by UK Powerhouse predicts the city’s economy will grow by 14.5% in the next decade. Daniel Owen-Parr, Together.
In the Midlands, HS2 continues to have a desirable impact in Birmingham and Staffordshire, as does the regeneration in Birmingham itself. As a knock-on effect of this, we have seen relocations of staff from London to Birmingham for some large organisations, increasing property demand and maintaining strong prices.
Meanwhile, in Coventry we are also seeing a growing population, in line with predictions that it will have a leading place in the economy post-Brexit, with Theresa May calling it an “industrial powerhouse” and hailing Jaguar Land Rover, which is based there, as one of the “jewels in the crown of the British economy.”
This kind of major investment will undoubtedly have a knock-on effect for associated industries in the region, creating more jobs and keeping property prices buoyant.
OR GO WEST!
Likewise, the outlook for the South West is also encouraging. The region was found by another index from a property website to be one of the top four for annual price growth in April, which stands the area in good stead, despite the findings from the Halifax.
National house price indexes are helpful as a snapshot of the property market but are more often than not skewed by the unique situation in Central London, so it’s important to look at what’s happening regionally to put them into context and to realise that, even in pockets of the capital and the South East, there are still opportunities.
In fact, prices for property in lower bands in some areas are still on the up. For example, Hometrack’s recent analysis identified areas such as Peckham, Walthamstow and Clapton, where prices are currently increasing by eight per cent year-on-year. There is also evidence of house price growth elsewhere in the South East, with places such as Milton Keynes and Welwyn Garden City registering robust increases, in contrast to the prices at the top end of the central London market, which are said to be falling.
This is, in part, attributed to the stamp duty increase on properties worth more than £1 million and other changes that landlords have faced such as cuts to mortgage tax relief, all of which impact profitability and, as a result, reduce demand in the higher-value brackets in particular.
Buyers and investors need to take a long-term view and put these quarterly ups-and-downs into context – as long as there’s a shortage of housing, we’re going to see continuing demand for property, but even across London and the South East there will be huge variations. It’s an exciting time for the regions and investors should be looking at the long-term view, and taking the bigger picture into account.