Housing affordability is improving at the fastest pace in eight years, but house price growth still remains weak, new analysis reveals.
Rightmove says the average annual rate of growth was only 0.2% in February compared to the previous year.
With annual wage growth of 3.4% outstripping asking prices, this means buyer affordability is rising at the fastest rate since 2011.
Monthly property prices rose by 0.7% - or £1,981 - in February, taking the average house price to £300,715.
Rightmove director Miles Shipside says: “Sellers’ subdued pricing is now being outstripped by higher average wage growth, meaning that buyer affordability is on the rise at the fastest rate in nearly eight years. Buyers are also being given the leg-up by cheap mortgage rates, if they can meet lenders’ criteria and lay their hands on a large enough deposit.”
Over the past 20 years house prices growth has risen at a far faster rate than wages overall, meaning homes have become less affordable for workers.
Figures from the Office for National Statistics show that the average value of a property is now 7.8 times the average annual salary.
Mr Shipside adds: “In theory the scene would be set for an active spring if it were not for the uncertain political backdrop. As it is, the extent of that activity will depend on the degree of hesitancy among sellers to try to sell and be realistic on price, and buyers overcoming short-term uncertainty and taking a medium-term view that this is a good time to buy. As always those decisions will also be influenced by local market dynamics.”
Rightmove says new sellers in all northerly regions, including the Midlands, have sufficient pricing power that they can ask for modest increases compared with a year ago.
Six of these seven regions are seeing annual asking price growth in excess of 2%, with Yorkshire & the Humber as the highest riser at 3.6%.
Scotland is the poorest performer year-on-year, but new seller asking prices are still 1.6% higher. In contrast, all southern regions fall below that figure, with London (-2.1%), the South East (-1.4%) and the East of England (-0.2%) having average prices cheaper than a year ago.
UK house prices in February
Source: Rightmove February 2019
Uncertainty regarding Britain’s exit from the EU in March continues to weigh on the housing market as buyers hold off, according to some experts.
UK annual house price growth has slowed to its lowest level since 2013, data from the ONS shows.
Figures from Halifax paint a similarly bleak picture.
According to the lender, house prices fell by more than £6,000 in December to £223,691 – the second largest monthly fall since September 2010.
Nick Leeming, chairman at estate agent Jackson-Stops, says: “Given that we currently have no clearer idea of our position outside of the EU with so few weeks to go until Brexit day on the 29th March, it’s not surprising that some parts of the market remain hesitant. However, for those looking to make a move the best advice we can give buyers is to do their research."