House prices in the UK remained stable in August, despite doom-and-gloom predictions after Brexit, the latest UK House Price Index (HPI) for August has revealed.
The UK HPI – the most accurate house price index, which uses data from property transactions recorded by the Land Registry –found that property prices went up by 8.4% over the year to August, while monthly house prices rose by 1.3% since July 2016. This put the average property price in the UK at £218,964.
However, the report said that while August was “a period of relative stability”, with demand and supply broadly unchanged compared to July, the market was “somewhat weaker” than in 2015 and early 2016.
In London, prices shot up by 12.1% over the year, taking the average property price to £488,908.
Regionally, the biggest annual price hike was seen in the East of England, where prices went up by 13.3%, compared to just 3% in the North East.
When it comes to housing demand, the volume of lending approvals for house purchases fell slightly in August compared to July, with levels the same as in early 2015. While sales were stable between July and August, they were below levels seen in 2014, 2015, and before the stamp duty changes in early 2016.
Easing of house prices in September
Other indices, published over the last month, which look at property prices in September, are a little more cautious.
The UK’s largest mortgage lender, Halifax, which looked at mortgage valuations in the three months to September, says that annual house price growth was 5.8% higher than in the same three months in 2015. This compared to 6.9% in August and continues the downward trend when compared with the annual increase of 10% in the three months to March 2016.
Halifax says that September’s 5.8% figure is the lowest yearly growth rate since August 2013, when it was 5.4%.
Between August and September, house prices were almost static, going up by 0.1%. The bank put the average property price at a more conservative £214.024 in September.
Martin Ellis, Halifax housing economist, says: “The housing market has followed a steady downward trend over the past six months with clear evidence of both a softening in activity levels and an easing in house price inflation.”
Softening in demand Nationwide’s house price index for September, which again is based on mortgage valuations, is broadly similar to Halifax’s – though it’s average house price is lower.
It found that annual house price growth in the three months to September was up by 5.3% – down from 5.6% in August. It put the average house price at £206,015.
It reported subdued house price growth of 2% in Scotland and of 2.4% in Northern Ireland, while Wales witnessed a 0.5% drop in growth, as did the North of England (-0.2%), when compared with the third quarter of 2015.
Robert Gardner, Nationwide's chief economist, says: “The relative stability in the rate of house price growth suggests that the softening in housing demand evident in recent months has been broadly matched on the supply side of the market.
“Survey data indicates that, while new buyer enquiries have remained fairly subdued, the number of homes on the market has remained close to all-time lows, in part due to low rates of construction activity.”
Online estate agent, Rightmove, which looks at average prices of properties marketed on its portal over the past month, reported a north-south divide in September. It suggested that while there is a sellers’ market in the North, with agreed sales up on 2015 and available stock down, a buyers’ market dominates the South.
It reports that the six northern regions (North West, North East, Yorkshire & the Humber, East Midlands, West Midlands and Wales) witnessed an 11% decline in available housing stock for sale compared to the same period in 2015. This has led to sellers holding out for the asking price.
In contrast, the four southern regions (Greater London, South East, East of England and the South West) saw available stock for sale go up by 16% compared to September 2015, with a 10% decline in sales across all four regions.
Across the UK, Rightmove reports that prices of properties coming on the market are up by 0.9% - or £2,623 - in September to £309,122 – just 0.4% or £1,349 short of its record high in June 2016.
Miles Shipside, Rightmove director and housing market analyst says: “After the referendum result and the usual summer slowdown, estate agents' experiences appear to fall into one of two camps, with a definite North-South divide. Agents in the northern half of the country reported a quiet week or two after the surprise result of the Brexit vote, but most then saw a quick return to good levels of buyer enquiries and subsequent sales agreed. In contrast, many in the southern regions saw more prolonged hesitancy among buyers, with it taking until September before a marked pick-up in activity.
“What has continued is the overall upwards trajectory in the average price of property coming to market, underpinned by years of inadequate new-build supply. After some price falls over the quieter summer period, the national average is now less than a couple of thousand pounds shy of its all-time high recorded in June,” he adds.