UK property market still in the doldrums

Stephanie Hawthorne
25 May 2018

Much of the UK housing market remains relatively flat and listless with some exceptions – notably in the Midlands and Wales – according to latest property price indices, with supply shortages providing something of a floor to prices.

The inner London malaise has now spread to the South East commuter belt with London showing a slight fall in property prices.

Key stats at a glance

  • UK House Price Index, March 2018: House prices up by 4.2% annually. Average price of a UK property: £224,144. Monthly change: -0.2%
  • Halifax House Price Index, April 2018: House prices up by 2.2% annual. Average price of a UK property: £220,962. Monthly change: -3.1%
  • Nationwide House Price Index, April 2018: House prices up 2.6% annually. Average price of a UK property: £213,000. Monthly change: 0.2% 
  • Rightmove House Price Index, May 2018: Asking prices up by 1.1% annually. Average asking price of a UK property £308,075. Monthly change: 0.8%

Monthly changes to property prices

According to the UK House Price Index, UK house prices grew by 4.2% in the year to March 2018, unchanged over the year to February 2018 but down -0.2% since last month.

Looking at the demand for housing, the Royal Institution of Chartered Surveyors’ (RICS) UK Residential Market Survey for March 2018 revealed the new buyer enquiries series fell for the 12th consecutive month. RICS mention concerns over affordability and the lack of new instructions as factors hindering demand.

On the supply side, RICS reported the net balance for their new instructions series fell again. Average stocks per responding estate agent remain near a record low. Both sales and price expectations continue to be flat in the near term. There is greater optimism in the longer-term outlook, particularly for prices.

Simon Robinson, RICS chief economist, says: “The housing market typically tends to see a pick-up in activity at around this time of the year and the feedback from respondents to the latest survey does seem to be capturing this tone. However, once this seasonal pattern has been allowed for the underlying trend in transactions still remains broadly flat.”

This is good news for buyers. Steve Seal, director of sales and marketing at Bluestone Mortgages, emphasises: “With house price growth rising at a more sustainable rate, it is very much a buyer’s market.”

Russell Quirk, chief executive of, paints a gloomier picture, highlighting a “fairly static and subdued outlook”.

Other sources bear out the flat nature of market.

Commenting on Rightmove’s May House Price Index, Miles Shipside, Rightmove director and housing market analyst, reports: “After six years of continual year-on-year price growth the current market is becoming increasingly price-sensitive, with new-to-the-market sellers being limited to an average asking price growth of just 1.1% over the last year.

“London prices fell by -0.2% and the South East at -0.1% year on year with all other regions in positive territory. The last time the South East recorded an annual price fall was in 2011.”

The number of sales being agreed by estate agents so far in 2018 compared to the same period a year ago has fallen most in the South East (-8.5%), the East of England (-7.8%), and Greater London
(-6.9%). Nationally sales agreed numbers are down by 5.4%.

Mr Shipside advises: “Sellers need to pitch their price at a tempting level to entice buyers, as while there are signs of strong demand there appears to be hesitation among some buyers to commit.”

London down but not out

Commenting on the UK House Price Index, Jonathan Samuels, chief executive of property lender Octane Capital, says "For annual growth in London to be the lowest since 2009 underlines the extent of the capital's fall from grace. The once untouchable market has become a victim of its own extraordinary success.

“While prices will never collapse in the capital, because of demand and the sheer lack of supply, it's now the turn of the regions to play catch-up.”

Lucy Pendleton, founder of London estate agent, James Pendleton, agrees. “Prices being achieved across the rest of the country still betray a housing market in relatively rude health,” she says.

Rightmove bears this out, stating that annual rates of asking price growth in excess of 4% are still to be found in the East Midlands (+4.8%), the West Midlands (+4.3%) and Wales (+4.3%).

Liz Brown, divisional managing director at Connells estate agency, says: “Both East and West Midlands continue to do well with strong price growth of 4% and good activity from both first-time buyers and home movers. Prices in these areas hold steady – never seeming to suffer the excessive ‘peaks and troughs’ of other regions.

“Birmingham is in the throes of massive regeneration with HSBC relocating here, HS2 coming, lots of city centre residential developments to buy, rent and invest in and other Midlands cities – including Wolverhampton, Derby, Leicester Worcester – are all following suit and enjoying high demand”

The experience at the Halifax is similar. Its figures showed that prices in the past three months to April were 2.2% higher than in the same three months a year earlier, down from the 2.7% annual growth recorded in March.

Russell Galley, managing director of Halifax, says: "Housing demand has softened in the early months of 2018, with both mortgage approvals and completed home sales edging down. Housing supply – as measured by the stock of homes for sale and new instructions – is also still very low.

“However, the UK labour market is performing strongly with unemployment continuing to fall and wage growth finally picking up. These factors should help to ease pressure on household finances and as a result we expect annual price growth will remain in our forecast range 0-3% this year.”

Low levels of activity

Looking at the Halifax April House Price Index, which showed a monthly fall of -3.1%, Sam Mitchell, chief executive of online estate agent, says: “The market is listless and needs a spark, but it's hard to see where that spark will come from.

"New instructions and transaction levels are bumping along the bottom and a lot of people doing the moving are those who simply have to move. First-time buyers have been particularly active of late but this snapping back like elastic in the monthly figures could be a signal that, despite the favourable tax and lending regime available to them, demand even among that group is beginning to fade. The market won't collapse because of the lack of stock and cheap money still available, but 2018 is shaping up to be fairly uneventful."

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