Property prices up 5.2% in year to December 2017, latest official index shows

Property prices up 5.2% in year to December 2017, latest official index shows
14/02/2018 , by , in INTERNATIONAL

Property prices in the UK increased by 5.2% in the 12 months to December 2017, up from 5% the previous month, the latest official index figures show.

Prices also increased month on month, up by 0.4% since November 2017, taking the average value to £226,756, according to the data published by the Land Registry.

Overall the annual property price growth rate has slowed since the middle of 2016 but remained at broadly 5% during last year, the index report points out, giving some stability to the housing market.

A breakdown of the figures shows that in England prices increased by 5% year on year taking the average price to £244,000, in Wales prices increased by 5.4% to £154,000, in Scotland prices increased by 7.7% to an average of £149,000 and in Northern Ireland prices increased by 4.3% to £130,000.

The regional data for England shows that the South West recorded the biggest rise in average property price over the last 12 months, up by 7.5% while the North East recorded the largest monthly price rise at 2.7%.

London saw the lowest annual price rise of 2.5%, taking average values to $484,173, while the South East saw the most significant monthly price fall, down by 0.5%

In Scotland the most expensive area to live in was Edinburgh where the cost of an average house was £248,000. In contrast, the cheapest area to purchase a property was East Ayrshire where an average house cost £94,000.

The solid end to 2017 has laid the groundwork for a brisk start to the property market in 2018, according to Jonathan hopper, managing director of Garrington Property Finders. ‘Two key catalysts have injected momentum into what is steadily becoming a more free-flowing market: December’s subtle improvement in sentiment around Britain’s economic prospects and the fear that interest rate rises will end the era of cheap finance sooner than expected,’ he said.

‘Together these forces have prompted a number of would-be buyers to get off the fence and commit to moving in 2018. As a result the market dynamics are shifting. Whereas in 2017 constrained demand allowed the limited number of buyers to make all the running, this year the pendulum appears to be swinging back to create a more balanced market,’ he explained.

‘Crucially, the experience of 2017 has forced many sellers to adjust their price expectations. Homes coming onto the market now tend to be much more sensibly priced. Conversely, some buyers may now need to shed the assumption that every seller will be willing to slash prices further. Many of the discounts are already priced in as the stand-off of 2017 eases and the market returns to a more free flowing, if equally cautious, pattern,’ he added.

However, Owen Woodley, managing director of Post Office Money, believes that ‘subdued house price growth’ has left many movers uncertain about what to expect from house prices over the next 12 months.

‘This uncertainty is likely to have a knock-on effect, as buyers delay putting in offers, and sellers postpone putting their homes up for sale as they wait to see whether price growth will pick up again. It remains a challenging market for many, especially for buyers in Scotland, where house prices grew 7.7% in the last 12 months, but those trying to get a foot on the ladder can still benefit from low interest rates and a stronger position within a buyer’s market,’ he said.

But according to Jeremy Duncombe, director of the Legal & General Mortgage Club, the index figures are a sign that the market is on a stronger footing for the coming months. ‘House prices are now far more aligned with wage inflation than in previous months and couple this with competitive mortgage rates, first time buyers should find it that little bit easier to get onto the property ladder,’ he explained. However, he pointed out that the issue of affordability has not gone away.

Meanwhile, Jeff Knight, director of marketing at Foundation Home Loans, believes prices are too high. ‘It has not been the best start to the year for sellers. People are holding off until they are in a better position to make such a big financial commitment, held back by lack of disposable income,’ he said.

‘That doesn’t change the fact that property prices are still inflated, underpinned by the lack of supply, and pent-up interest will continue to nudge properties just out of reach for those hoping to buy, even with the cut to stamp duty,’ he added.

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