House prices failing to sizzle this summer

Published by Hannah Nemeth on 19 July 2018.
Last updated on 19 July 2018

Sun houses

It’s the summer season and with soaring temperatures it’s not surprising that house buying and selling is not a priority for many people.

The general consensus is that house prices in June remained much the same as last month – relatively flat.

According to the latest RICS UK Residential Market Survey for June, sales activity in the UK housing market remain “subdued”, with chartered surveyors reporting a decline in newly agreed sales for the 16th month in a row, while the number people looking to buy remained flat in June.

Key stats at a glance

  • UK House Price Index, May 2018: House prices up by 3% annually. Average price of a UK property: £226,351. Monthly change: 0.1%
  • Halifax House Price Index, June 2018: House prices up by 1.8% annual. Average price of a UK property: £225,654. Monthly change: 0.3%
  • Nationwide House Price Index, June 2018: House prices up 2% annually. Average price of a UK property: £215,444. Monthly change: 0.5% 
  • Rightmove House Price Index, July 2018: Asking prices up by 1.4% annually. Average asking price of a UK property £309,191. Monthly change: -0.1%

According to the UK House Price Index, UK house prices grew by 3% in the year to May 2018, up by 0.1% since last month.

Commenting on the data, Kevin Roberts, director at Legal & General Mortgage Club, says: “After years of near double-digit growth, house prices are now rising at a far steadier pace. That’s good for homeowners benefiting from price rises, as well as buyers who also continue to be supported by a strong mortgage market that offers great choice and near-record low rates.” 

Russell Quirk, chief executive of hybrid estate agent eMoov, comments: “We are starting to see market activity heighten on the supply side and it won’t be long before this filters through to potential buyers. While the demand-supply seesaw is finely poised at the moment, once it tips and buyer interest overtakes the stock available, price growth will inevitably pick up the pace and return to previous levels.

“In addition, while annual price growth as a whole may have slumped to just 3%, there are a wealth of areas the length and breadth of the UK enjoying double-digit price growth on an annual basis.”

Sales agreed are “flat”

Rightmove, which looks at asking prices and reports on July, says that prices of properties just coming on to the market are almost static, down by 0.1% (-£248) compared to June. An 8.6% increase in new sellers on the property portal in July, compared to the same period in 2017, means that sales agreed are flat and there are too many sellers trying to attract buyers.

Miles Shipside, Rightmove director and housing market analyst, explains: “While an increase in seller numbers is a welcome sign of more liquidity in a generally stock-starved market, it has, unfortunately, come at a quieter time of year. Prospective buyers will need tempting with a summer special price or a beautifully finished and presented must-have home, and sellers whose homes tick these boxes then need an estate agent with good marketing skills to promote it effectively.”

Rightmove highlights the need for sellers to be realistic in their pricing. It reports that a third of properties currently on Rightmove have been reduced at least once since they first came on the site.

Mr Shipside advises: “Our research shows a much-increased chance of a quick sale if priced sensibly at the outset. With more price reductions at this time of year than in any of the last six years, there is likely to be a combination of both initial overpricing and failure to react fast enough or reduce by enough when initial buyer interest fails to lead to a sale.”

House prices expected to rise by 1% in 2018

Nationwide report annual house price growth at a five-year low in June, with annual house price growth “softening” to 2% and prices up 0.5% since May.

Commenting on the figures, Robert Gardner, Nationwide’s chief economist, says: “Annual house price growth fell to its slowest pace for five years in June. However, at 2% this was only modestly below the 2.4% recorded the previous month.

“Overall, we continue to expect house prices to rise by around 1% over the course of 2018,” he adds.

London now “more sensibly priced”

Nationwide also reveals that London was the only region to see a drop in property prices, down 1.9% year on year between April and July.

But Mr Gardner points out that it’s not all bad news for London homeowners, saying: “Despite the recent underperformance, prices in the capital are still more than 50% above their 2007 peak, while prices in the UK overall are only 15% higher.”

Jonathan Hopper, managing director of Garrington Property Finders, comments: “Most London sellers have jettisoned the unrealistic price expectations fostered by years of seemingly endless rises – and the homes being listed for sale now are much more sensibly priced.”

Meanwhile, Halifax’s figures for June show that prices in the past three months to June were 1.8% higher than in the same three months a year earlier and up by 0.3% over the month.

Russell Galley, managing director at Halifax, says: “Activity levels, like house price growth, have softened compared to the final months of last year. Mortgage approvals have been in the low range of 63,000 to 67,000 since the start of the year, while home sales have remained flat so far this year.”

However, he adds that “continuing shortage of properties for sale should continue to support price growth.”

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back to the 90s then, plenty

back to the 90s then, plenty of repossessed houses in auctions, bargains for those of us who can put our money where our mouths are.