House prices continue their upward trajectory – albeit at a slower pace. The UK House Price Index, which is for completed transactions in February, shows that annual house price growth is well below its 2016 figures, while other indices point to a narrowing of the north-south divide and a pick-up in demand from first-time buyers.
Key stats at a glance
- UK House Price Index for February 2017: House prices up by 5.8% annually. Average price of a UK property: £217,502.
- Halifax House Price Index, March 2017: House prices up by 3.8% annually. Average price of a UK property: £219,755.
- Nationwide House Price Index, March 2017: House prices by 3.5% annually. Average price of a UK property: £207,308.
- Rightmove House Price Index, April 2017: Annual house price growth, up by 2.2%. Average price of a UK property: £313,655.
Rightmove’s House Price Index for April – the most recent property market reports – says that the price of property coming on to the market has hit a record high of £313, 655 – up by 1.1% or £3,547 between March and April this year.
However, the index, which looks at the asking prices of property coming on to the market rather than prices paid, revealsed that annual growth has slowed to 2.2%. This is the lowest for four years.
Rightmove reports that first-time buyer activity is driving growth, up 6.5% over the year to April, with the average price of a first home now hitting £194,881. It suggests that this has been driven by strong buyer demand, with the highest number of sales agreed at this time of year since 2007.
Miles Shipside, a director at RiIghtmove, explains: “High buyer demand in most parts of the country has helped to propel the price of newly marketed property to record highs. There are signs of a strong spring market with the number of sales agreed achieved at this time of year being the highest since 2007.
“In the first-time buyer sector of two bedrooms or fewer, we are seeing record prices and strong buyer activity, with a 6.5% annual rate of increase. However, this is tempered by a slower pace of increase further up the market, with an overall annual rate of increase of 2.2%, the lowest recorded since April 2013,” he says.
Nick Leeming, chairman at estate agency Jackson-Stops & Staff, adds: “The speed and efficiency of the market is also improving – it now takes 14 days less to sell a property than it did at the start of the year which shows that buyers, sellers, banks and solicitors are coming together to ensure the market continues to move.”
Double-digit growth in East of England
See the table below for the monthly changes to property prices. (Click on the graph to enlarge the image.)
Notes: The UK House Price Index uses sales data from the Land Registry, Registers of Scotland and Land and Property Services Northern Ireland. Halifax and Nationwide indices are based on customer mortgage valuations and Rightmove's index is based on sale prices on its website.
The latest available figures from the UK House Price Index (UK HPI) for February showing an annual price rise of 5.8% – as compared to 6.2% in January – which means the average property in the UK is now valued at £217,502.
The Land Registry points out that this is well below the average annual house price growth seen in 2016, which was 7.3%.
House price growth in England was slightly up on the national figure, at 6.3%, taking the average property value to £234,466.
The UK HPI reports that house price growth continues to fall in Wales – now standing at just 1.8%, with properties averaging a more affordable £145,293. Over the month, they dropped by 0.9% since January 2017.
The East of England continues to be the region with double-digit house price growth – going up by 10.3% over the past 12 months.
Prices fall in London and the South East
London is showing signs of a weaker market, with prices up by 3.7% over the year to February 2017, and an average property price of £474,704. House prices have fallen by -0.9% since January 2017, with the number of completed house sales in London down by 31.3% to 6,665 compared with 9,700 in December 2015.
The biggest monthly price fall was in the South East, where house prices fell by 0.1%.
Commenting on the UK HPI, Russell Quirk, chief executive of eMoov.co.uk, says: “Although many have been quick to attribute a slowdown in the market to fears of Article 50 and buyer uncertainty, the latest data from the Land Registry would suggest a more natural adjustment is currently happening to the market.
“Prices across the board have generally continued an upward trend despite a slower start to the year than usual, but it is no coincidence that both London and the South East have seen some of the only falls in monthly property price growth.
“Both have considerably higher average house prices than the rest of the UK and what we are currently seeing is the property market in these areas realigning itself with the rest of the country, having seen an abnormal level of inflation over the past year.”
‘House price growth has halved’
In its latest report, Halifax reveals that house prices in the three months to March were 3.8% higher than in the same period a year ago – down from 5.1% in February and the lowest rate of annual growth since May 2013.
Martin Ellis, Halifax housing economist, says: “The annual rate of house price growth has more than halved over the past 12 months. A lengthy period of rapid house price growth has made it increasingly difficult for many to purchase a home as income growth has failed to keep up, which appears to have curbed housing demand.
“Nonetheless, the supply of both new homes and existing properties available for sale remains low. This, together with historically very low mortgage rates, is likely to support house price levels over the coming months."
North-South divide narrows
Meanwhile, Nationwide reports a ‘softening’ of house price growth to 3.5% – its lowest rate for 19 months. This puts the average UK property at £207,308, with prices falling by -0.3% in February.
It also reveals a narrowing of the gap between the weakest and strongest regions – the narrowest gap since 1978. The strongest growing region was the Outer South East with annual house price growth of 6.4%, while the weakest was the North with a drop of -0.4%.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “The March figures from Nationwide are interesting because they confirm the trend we have seen in other surveys that house price growth is fairly stable or falling on a monthly basis and not rising as quickly when the figures are compared annually.
“While demand to buy is still strong, accessibility and affordability are proving illusive for many,” he adds.