Annual house price growth in the UK creeps upward
Annual house price growth in the UK has picked up slightly to 2.6% in April and prices rose 0.2% month on month to an average of £213,000, the latest index shows.
However, overall, the index report from lender the Nationwide, says that prices are still expected to rise by around 1% over the course of 2018, less than recent years.
‘Looking ahead, much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates. Subdued economic activity and the ongoing squeeze on household budgets is likely to continue to exert a modest drag on housing market activity and house price growth this year,’ said Robert Gardner, Nationwide’s chief economist.
He pointed out that there has been a recovery in first time buyer numbers which are now broadly in line with pre-crisis levels. ‘The easing in credit availability, including schemes such as Help to Buy, have helped boost activity,’ he said.
‘Meanwhile, home mover activity has remained relatively subdued, in part due to the lack of stock on the market. Buy to let purchases have fallen as a share of total transactions since 2016, which reflects a softening in demand following tax changes and changes in underwriting standards,’ he added.
Property prices are now rising at much healthier levels, according to Craig Hall, new build manager at the Legal & General Mortgage Club. ‘Mortgage rates are still competitive and support from various schemes such as Help to Buy remains on hand to help buyers onto the housing ladder. However, there are buyers out there who are still finding it difficult to take their first step,’ he said.
Nicholas Finn, executive director of Garrington Property Finders, believes the current rate of growth is the new ‘normal’. ‘The property market is settling back into a period of cautious normality. Last year’s snap election cheated the market of its traditional post-Easter boost, but this spring we’ve seen an injection of new stock and an uptick in buyer interest. The number of homes for sale remains at a desperately low level, but crucially the market has become free-flowing again,’ he explained.
He thinks that homes coming onto the market now are doing so at more realistic prices. ‘Buyer demand is holding up well in most areas, and the net effect is to produce a market which is turning over well and nudging prices upwards,’ he added.
There is likely to be renewed optimism in the market, according to Russell Quirk, chief executive officer of hybrid estate agent Emoov. ‘With mortgage affordability coupled with an influx of stock and a seasonal uplift in buyer demand, it’s extremely likely that the market uncertainty caused by previous political influences will now evaporate in the spring with a renewed optimism in the market,’ he said.
‘Those that have been considering a property sale or purchase but have remained on the fence due to wider market conditions, should be reassured that the market has turned a corner and will continue to do throughout the remainder of the year,’ he added.