East Midlands leads growth in a stagnant UK housing market
The UK housing market is flat with the national average asking price rising just 0.1% month on month in August but there is considerable regional variation, according to the latest index.
Prices are still 3.3% higher than a year ago with annual growth led by the East Midlands where prices are up 6.5% compared with August 2016, the date from Home.co.uk shows.
Indeed, the East and West Midlands have seen the most improvement over the last year while in London, prices fell by 0.8% month on month and are up just 0.4% year on year.
However, there are fewer properties for sale, with supply down by 4% year on year and properties are spending longer on the market in some locations such as the East of England, the South East and London where prices tend to be higher.
Wales and the South West have shown solid performances over the last six months, during which time prices have risen faster than the national average. Rents are also rising in both regions and the report suggest that this will attract further investment, but Wales has already had by far the biggest rise over the last year at 8.3%.
Scotland and the North East both suffered price drops over the last month of 1.1% and 0.3% respectively. The Scottish property market is slowing and rents there are falling, down 2.2% on average since August 2016. The North East has shown a small increase in pace over the last year and looks set to gather more momentum akin to that observed in the neighbouring regions of Yorkshire and the North West.
‘Investment remains a key driver in the current market despite the increased tax burden for landlords, but such investment is focused upon yield, both rent and potential capital gains. Hence, buy to let investors are looking outside of the overbought regions of London and the South East, where yields are lower and overinvestment has created oversupply of properties for rent,’ said Doug Shephard director at Home.co.uk.
‘The Midlands and the North are seemingly now more attractive options for buy to let and, looking at home price appreciation over the last five years, these areas have much more room for growth than London, the East of England and the South East. The East of England has now been overtaken by the booming East Midlands in terms of annualised price growth,’ he pointed out.
‘Asking rents in the Greater London region continue to fall and have fallen around 10% over the last two years and this will discourage investment and further depress asking prices. We expect further significant price falls, as observed this month, in the capital region over the autumn and winter months,’ he added.
Looking ahead Shephard predicts price rises in the West Midlands to accelerate over the next year as demand outweighs supply. The North West and Yorkshire markets have also improved considerably since August last year and could continue to do so.