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    'Softer house prices will have a restorative effect on the London property market long term'



    Lucy Pendleton

Relocate MagazineUK house prices 'rising at slowest rate since 2013'

According to the latest Halifax index, in June house prices across the UK increased at the lowest rate in more than four years. This follows a flattening trend of house prices since May.

House prices across the UK last month increased at the lowest year-on-year rate seen in more than four years, according to the latest Halifax index.

The annual rise recorded in June stood at 2.6 per cent – the lowest since May 2013 and about a quarter of the double-digit rate seen in the spring of last year. On a monthly basis, prices declined by one per cent between May and June, bring the average price across the country to £218,390.

House price increases continue to flatten

Martin Ellis, Halifax housing economist, said, "House prices have flattened over the past three months. Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages.

"This, combined with the new stamp duty on buy-to-let and second homes in 2016, appears to have weakened housing demand in recent months.

"A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale should help continue to underpin house prices over the coming months."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, agreed, saying he did not expect a continuing fall in prices over the rest of the year.

"The dip in Halifax's measure of house prices – which dragged year-over-year growth down to its lowest rate since May 2013 – probably doesn't mark the start of a sustained fall in prices," he said. "The index is volatile even at the best of times, and Nationwide reported a 1.1 per cent month-to-month rise in its similar measure of prices in June. The underlying trend in prices probably is flat."

The number of properties being sold has also held up relatively well with figures from HM Revenue and Customs showing that the number of sales in the three months to May was one per cent higher than in the previous quarter.

No Post-election property rally

Jonathan Hopper, managing director of Garrington Property Finders, commented, “This first snapshot of the post-election property market confirms what many feared – there has been no relief rally. Across the UK market as a whole, average prices are flat-lining rather than falling, and this has dragged down the annual rate of growth to its lowest level for more than four years.

“In London it is a different matter. The capital’s prime property prices have been under pressure for more than a year and we’re increasingly seeing astute buyers seize the opportunity to secure substantial discounts.

“But in many other areas the market continues its listless rise, with prices being propped up by what Royal Institution of Chartered Surveyors data confirms is now the lowest ever level of homes for sale.

“There may be healthy levels of intent among buyers, but with many discretionary sellers holding off on listing, supply is being choked and prices artificially supported. Nevertheless price growth is meandering and tentative at best.

“Many in the industry had hoped that once the chilling effect of the election was past, the traditional spring surge in activity would kick in. But on this evidence the bounce has been cancelled rather than delayed. The most likely culprit is the yawning gulf between house price growth and wage growth."

Annual growth continues to slump

Lucy Pendleton, founder and director of independent estate agents James Pendleton, said: “The real takeaway here is that the annual growth rate has slumped despite last year’s comparative data covering the uncertainty of the EU referendum and the run-up to it.

“In that context the market’s price performance is decidedly sluggish nationally, even if last month was a general election month. In London we’ve seen slight downward adjustments in prices to more realistic levels but transaction levels have not tailed off, which is a good sign that more extreme price corrections are not necessary.

“We’re now in the midst of a slight downward trend, particularly in London, but where this needs to happen it’s in everyone’s interest that it proceeds in an orderly fashion."


Relocate Magazine
By David Sapsted, 7th July 2017
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Help to Buy
Lucy Pendleton to give insight into the recent November 2017 House Price Index.
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