Property prices dip in England and Wales
Property prices in England and Wales fell by 0.5% in March, taking the average price of a house to £189,901, the latest land registry figures show.
This takes annual house price growth to 6.7% but prices vary according to location with London and the East of England the only two regions with month on month growth.
In London property prices increased by 0.2% month on month and by 13.9% year on year, taking the average price to £534,785. In the East of England price were also up 0.2% month on month, taking annual growth to 10.7% and average value to £220,989.
Everywhere else in England and Wales prices fell month on month with the steepest fall of 2.6% in Yorkshire and Humber, followed by a fall of 2% in the West Midlands. Prices fell by 1.2% in the North East, by 0.9% in Wales and the South West, by 0.4% in the South East, by 0.3% in the East Midlands and by 0.1% in the North West.
Year on year prices were up everywhere apart from the North East where annual growth was down by 0.7% to £97,581. Prices were up 10.3% in the South East, by 5.8% in the South West, by 5.7% in the East Midlands, by 5.3% in the North West, by 3.5% in Wales, by 3.1% in the West Midlands, and 1.6% in Yorkshire and Humber.
According to propertywire, “Experts point out that the fall in prices should not be a surprise after a mad rush in March as buy to let landlords and second home buyers sought to beat the introduction of a 3% stamp duty surcharge on additional homes that came into force on 01 April.”
David Brown, chief executive officer of Marsh & Parsons, believes that there is still a lot of energy in the first time buyer market for other owner occupiers unaffected by the stamp duty chance. ‘This should step up to fill any momentary fall back in investor demand, and keep prices on course. In London, there are 14 buyers competing for every available property on the market, which will keep the wheels of growth moving,’ he added.
According to Andy Knee, chief executive of LMS, the monthly dip will cause hopeful home buyers to breathe a sigh of relief that house prices have not stretched further out of reach.
‘But year on year, a 6.7% rise across England and Wales is cause for concern. In London particularly, where house prices rose 13.9% annually to exceed an average value of £534,000, homeownership is fast become possible for only the very wealthy,’ he said.
‘Despite government intervention to aid first time buyers, such as Help to Buy, Starter Homes and the Lifetime ISA, these schemes fall short of making property more affordable for millions,’ he pointed out and added that uncertainty over the referendum in June on the future of the UK in the European Union could have an effect.
But he does not think that property prices will be affected drastically in the run up to the referendum vote on 23 June. ‘Supply of housing remains critical and addressing that is the only way to keep pricing within reach for many. The housing market appears to be robust, but a healthy market is reliant upon first-time buyers and home movers being able to keep pace, something that cannot happen if house price rises continue,’ he said.
The stronger house prices growth seen at the beginning of the year is unlikely to return in the short term, according to Jonathan Hopper, managing director of the buying agents Garrington Property Finders.
‘But with demand still holding up, and a severe shortage of supply in many areas, we should expect to see more steady price rises during the summer months. March’s dip in prices is likely to presage a return to more normal rates of price growth rather than a serious slowdown in the market,’ he said.
‘Even though its annual level of price growth remains close to 14%, London’s extraordinary run of price rises has slowed dramatically as international buyers hold off on purchases until the Brexit uncertainty is past. Elsewhere, levels of buyer confidence remain solid, but with the surge in purchases by buy to let buyers now over, sellers now need to think more carefully about pricing competitively,’ he added.
Low interest rates will continue to drive demand, according to John Eastgate, sales and marketing director of OneSavings Bank and he added that an ongoing shortage of new houses in the UK is holding back supply.
‘Property values may see monthly fluctuations, but these underlying fundamentals are set in stone, and will continue to support prices in the long term,’ he said.
The small dip is good news for first time buyers, said Rishi Passi, chief executive officer of Oblix Capital. ‘Prices may well moderate further in the coming months as we witness the full effect of the new tax burdens on buy to let landlords. The possibility of a Brexit may also make some pause for thought, but in the longer term, infrastructure projects confirmed in the Budget such as Crossrail 2 and HS2 provide a strong foundation for the future of the property market,’ he pointed out.