Rightmove reports a fairly positive start to 2018 for the housing market, with the average asking price for properties up by just over £2,000 since December 2017, and up by 1.1% annually.
But it warns that sellers need to be realistic about the prices they can achieve.
This picture is confirmed by Hometrack, which reports that it is now a buyer’s market in London. The latest Hometrack UK Cities House Price Index suggests that the gap between asking prices and achieved sales prices is widening in London and other southern cities in the UK, as sellers are now accepting larger discounts.
While in 2014 the average discount in the capital was just 0.5%, this has now risen to 4% on average, with discounts of up to 10% being registered in inner London.
In contrast, in large regional cities such as Birmingham, Edinburgh, Glasgow, and Manchester it is now more of a seller’s market. For example, Birmingham and Manchester have seen the discount more than halve from 6% in 2013 to 2.7% in 2017.
2017 ended with the Halifax and Nationwide both suggesting annual house price growth was hovering between 2% and 3%.
However, the UK House Price Index, which looks at transactions completed for November, had a more positive picture, with growth of just over 5%.
Key stats at a glance
- UK House Price Index for November 2017: House prices up by 5.1% annually. Average price of a UK property: £226,100. Monthly change: 0.1%.
- Halifax House Price Index, December 2017: House prices up by 2.7% annually. Average price of a UK property: £225,021. Monthly change: -0.6%.
- Nationwide House Price Index, December 2017: House prices up by 2.6% annually. Average price of a UK property: £211,156. Monthly change: +0.6%.
- Rightmove House Price Index, January 2018: Asking prices up by 1.1% annually. Average asking price of a UK property: £297,587. Monthly change: +0.7%.
London ‘the weakest performer’
The latest figures from the UK House Price Index (UK HPI) for November shows an annual price rise of 5.1% over the year – up from 4.5% on last month’s annual growth figures. The average property in the UK now costs £243,339.
Prices have risen by 5.3% in England, with a monthly rise of 0.1% since October and an average property price of £243,339.
Over the year, all the regions saw house prices go up, with the biggest hike in the West Midlands – up by 7.2%.
Out of the regions, London – along with the North East – saw the lowest annual house price growth at 2.3% and with a monthly price fall of -0.9%. Other regions that witnessed a monthly drop in prices were the North East (-0.1%), Yorkshire and Humberside (-0.8%), South West (-0.5%) and East of England (-0.2%).
Nick Leeming, chairman at estate agent Jackson-Stops, suggests that the London market will not recover anytime soon.
He says: “Once again, we have witnessed annual house price growth in London remaining below the UK average.
“Throughout 2017, the prime central London housing market was inundated with buyers and sellers taking a ‘wait and see’ approach, which had a detrimental effect on the fluidity at the lower to middle ends of the market as well as the top.
“Punitive stamp duty rules can be blamed for halting transaction levels and if steps are not taken to reform the impact stamp duty has on the top end of the market, even just marginally, we cannot expect sales levels to increase or prices to change in 2018.”
UK house price growth in 2018 ‘likely to be pedestrian’
Halifax reveals that annual house growth to December is 2.7% higher than in the same quarter a year ago. However, this is down from 3.9% in the three months to November. It reports that house prices fell by -0.6% since November – the first fall since June 2017, with the average price now £225,021.
However, Russell Galley, managing director of Halifax Community Bank, believes that house prices won’t decline in 2018.
He says: “Nationally, house prices in 2018 are likely to be supported by the ongoing shortage of properties for sale, low levels of house-building, high employment and a continuation of low interest rates, making mortgage servicing affordable in relative terms. Overall, we expect annual price growth to continue in the range of 0%-3% at the end of 2018.”
Jonathan Samuels, chief executive of property lender Octane Capital, comments: "Few would argue with the Halifax's conclusion that UK price growth is likely to remain pedestrian at best during 2018. Low single-digit growth is about as exciting as it's going to get, but, in reality, this is a positive for the market given the affordability crisis in many areas of the country.
"The market pausing for breath enables people to catch theirs. High living costs coupled with low or negative wage growth are creating a lot of uncertainty and many households are minded to sit tight rather than transact.
“Prices would perhaps have fallen further were it not for the sheer lack of supply. It's the lack of supply rather than the strength of demand that is keeping annual price growth in the black."
‘Marginal’ house price growth in 2018
Nationwide reports that the annual rate of house price went up by 2.6% in December 2017, with prices up by 0.06% over the month and an average house price of £211,156.
Commenting on the figures, Robert Gardner, Nationwide's chief economist, noted the beginning of a shift with a slowdown of house price growth in London and the south of England.
He says: “London saw a particularly marked slowdown, with prices falling in annual terms for the first time in eight years, albeit by a modest 0.5%. London ended the year the weakest performing region for the first time since 2004.”
Looking ahead to 2018, he says that housing market performance will be determined by the wider economy and how Brexit affects it, though he still predicts that house prices will rise, albeit more modestly.
“Overall, we expect house prices to record a marginal gain of around 1% in 2018. Over the longer term, once the economy regains momentum, we expect house prices to rise broadly in line with earnings (around 3%-4% per annum), though if the rate of house building fails to keep up with population growth, prices may outpace earnings once again, as they have in recent years,” he says.
Buyers are “price-sensitive”
Rightmove reports asking prices in January 2018 being up annually by an average of 1.1%. Over the month since December, asking prices have risen by 0.7% – that’s equivalent to a £2,067 increase.
The property portal says that to have the best chance of a successful sale this year, sellers should note that buyers are still price-sensitive. It adds that sellers of properties suitable for first-time buyers will have the biggest chance of success following tax breaks on stamp duty in the Autumn Statement.
Miles Shipside, a director and housing market analyst at Rightmove, says: “Serious sellers should note that all regions are currently selling at a slower rate than a year ago, indicating choosier buyers. The total number of sales agreed was 5.5% down in the last quarter of 2017 compared with the same period in 2016.
“Setting tempting asking prices and then quickly reducing them if there is little initial interest will be key to turning this promising level of buyer activity into actual sales, especially in the less active sectors and locations of the UK.”
Halifax House Price Index – This UK-wide index is based on the house purchase price at the mortgage approval stage. It calculates the annual change as an average for the latest three months compared with the same period a year earlier as it says its figures provide a better picture of the underlying trend compared to a monthly year-on-year number as they smooth out any short-term fluctuations.
Nationwide House Price Index – The data for this index for the whole of the UK is drawn from Nationwide’s house purchase mortgage lending at the post-survey approvals stage.
Rightmove House Price Index – The data is compiled from the asking prices of properties when they first come on to the market via over 13,000 estate agency branches listing on Rightmove.co.uk. The sample includes up to 200,000 homes each month – representing circa 90% of the market.
UK House Price Index – The UK HPI uses house sales data from HM Land Registry, Registers of Scotland, and Land and Property Services Northern Ireland and is calculated by the Office of National Statistics.