Price growth and sales slowing in England and Wales, latest index reveals
Property prices in England and Wales increased by 0.1% in January after three successive monthly falls and sales were also down, the latest index figures show.
Quarter on quarter prices were down by 2.8% and price growth in the new build sector also struggled, down 1% on a quarterly basis, according to the data from the London Central Portfolio residential index.
An affordability imbalance is resulting in weaker sales, the index report also suggests, with transactions down 11.3% quarter on quarter. In the new build sector sales were down 1.2% annually following five monthly falls in a row.
It also points out that while price growth in the new build sector is slowing, these properties are still increasingly too expensive for many buyers with average prices now standing at £340,937, following annual price growth of 7%. They are 12.5 times average earnings.
With prices and sales beginning to decrease in both the market as a whole and the new build sector, there is a serious need to build more low cost housing to address the affordability issues being experienced across the country, according to Naomi Heaton, LCP chief executive officer.
‘Weaker sentiment and restrictions on borrowing have begun to impact buyers in England and Wales. Alongside a lacklustre picture for prices, sales volumes are also now recording falls,’ she added.
In Greater London prices increased by 1.5% month on month, the first increase in seven months but year on year growth continued to slow, falling to 3.2% and on an annual basis sales were down 8.2% to their lowest level since 2012.
In the new build sector prices increased 1% quarter on quarter and 4.3% year on year. Average prices for new builds now demonstrate a 28% premium over older stock and annual transactions in this sector have increased 4.3% with a boost provided by the Help to Buy scheme.
‘As the market continues to face affordability issues and domestic concerns around Brexit, inflation and interest rates, Greater London has seen a muted performance in January,’ said Heaton.
‘Despite Government initiatives to support buyers with various schemes, including reductions in basic rate stamp duty and exemptions for some first time buyers, it appears the domestic market is still struggling,’ she pointed out.
‘Salary caps on mortgage lending, which do not reflect the ratio between house prices and earnings, are hampering buyers, both to get on to the housing ladder and their ability to trade up. This has been exacerbated by the failure to meet affordable housing targets, a trend which shows little sign of reversing,’ she added.