Despite the doom and gloom and the hysteria surrounding last year’s referendum
vote and the snap general election earlier this year, experts are still
predicting growth within the property market. Analysis from the first two
quarters of 2017 show progress in the market.
This piece was written by Guardian business reporter Julia
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Growth in UK house prices has slowed but remains close to 5%, with
faster growth seen outside London, according to official data.
House prices across the country increased 4.7% in the year to May,
hitting an average of £220,713, the Office for National Statistics said. The
annual rate fell from 5.3% in April. Between April and May, prices were up
House values rose in all regions, with the east of England still
growing at the highest annual rate, of 7.5%, followed by the east Midlands at
Analysts at Jefferies said: “Despite the election and consistent
doom-mongering, we note that house prices continue to increase.”
The north-east registered the slowest annual growth, of 1.6%,
followed by London at 3%. Prices in the capital are still more than twice as
high as the UK average, at £481,345.
The most expensive borough to live in was Kensington and Chelsea,
in west London, where the average property cost £1.5m. In Burnley, Lancashire,
the average house cost £78,000.
James Allen, head of alternative investments at financial services
firm Walker Crips said: “It is clear that prime London may as well be a
different country.” He added that buyers in Kensington and Chelsea would need a
deposit of £450,000, based on a mortgage at 70% loan to value.
“For a one-salary household, gross income would have to be
£222,000. The number of people in the UK earning more than £200,000 is estimated
to be 235,000 or 0.7%. When such a small proportion of the population can
afford to live in a borough, demand must be coming from other quarters, namely
The ONS uses data from the Land Registry. Its annual house price
growth has slowed since mid-2016 but remains faster than the 2-3% growth
reported by major mortgage lenders Halifax and Nationwide in recent months.
Analysts believe that a fresh slowdown is under way.
Samuel Tombs of consultancy Pantheon Macroeconomics is predicting
that annual price growth will slow to 1.5% by the end of the year.
He argued: “Lenders are reporting that they will lend less in the
third quarter and the recent pickup in wholesale funding costs suggests that
they will not continue to cut mortgage rates. Meanwhile, the recent
deterioration in consumer confidence, largely in response to the intensifying
squeeze on real incomes, has made households less willing to make big ticket
The number of homes sold in the UK slumped 41% year-on-year in
March, largely because the March 2016 figure was boosted by buyers rushing to
complete before stamp duty changes the following month, the ONS said. In
London, transactions fell even further, by 57% (and 62% in inner London).
The housing slowdown means that the average home in Britain has
increased just over £3,000 in value (or £16.79 a day) since the start of the
year, according to analysis by Zoopla. The property website found the typical
home was valued at £304,469 as of 30 June, £3,309 more than in January. By
contrast, the average property value increased by £13,852 in the same period
Belper in Derbyshire, Hove in East Sussex, Todmorden in West
Yorkshire, Woodbridge and Sudbury in Suffolk are the towns that have seen the
fastest house price growth since January, between 6.6% and 7.4%, according to
Zoopla. Bexley and Swanley in Kent, Langport in Somerset, Worcester Park in
south-west London and Holyhead in Anglesey round out the top 10 property
hotspots, with price growth of more than 6%.
However, values vary widely among the hotspots, from £152,840 in
Todmorden to £492,850 in Worcester Park.
Richmond in North Yorkshire, Leatherhead and Walton-on-Thames in
Surrey, and Altrincham in Manchester were identified as cold spots, with the
biggest percentage falls in values – at around 5%. Pwllheli in Gwynedd,
Weybridge in Surrey, Southwell in Nottinghamshire, Ellesmere Port in Cheshire,
Burnley and Pontefract in West Yorkshire have also seen prices fall since
January, by more than 4%.
Doug Crawford, chief executive of conveyancing website My Home
Move, said that despite the slight slowdown, “the housing market is still
simmering away nicely. Even though the overall growth rate has fallen, for
first time buyers the slower rate of house price growth will be welcome,
particularly with inflation running ahead of wages for many.”
However, recent research conducted by his firm found that average
deposits climbed to £6,000 in the last year, with increases in some regions of
more than 30%.
Anne Baxendale of housing charity Shelter said: “While prices may
be slowing in London, the idea of owning a home of your own is still just a
fantasy for most people.
“The government needs to change the rules of the game by
introducing a fresh, new way of building homes that brings down the colossal
cost of land and gives more powers to communities to deliver the genuinely
affordable, high-quality homes that ordinary families are crying out for.”
Rents are also going up. Private rents rose 1.8% in the year to
June, the same rate as in the previous three months, according to an
experimental rental housing index from the ONS. It shows rents rose 14.8%
between January 2011 and June 2017, driven by London.
If you have been worried about selling due to the media's
perception of the market, this report shows you that there is still growth
within the housing market and selling is still the right thing to do.