UK House Price Growth Continues to Falter

The Office for National Statistics (ONS) and Land Registry has released its UK House Price Index (HPI).

The UK’s HPI is a quarterly publication, introduced in 2016, and includes data from all residential properties purchased for market value.

Some comments on the report are as follows:

John Eastgate, Sales and Marketing Director at OneSavings Bank says: “House prices are a reflection of general levels of consumer confidence and these numbers show that whilst we’re not as confident as we were a couple of years ago, equally no one is forecasting anything disastrous for the UK economy. HPI levels in excess of 5% are arguably not sustainable, so we should welcome this more moderate figure, noting that even at this level, HPI is still comfortably in excess of wage inflation.

Set against the backdrop of insufficient levels of new housebuilding, we still therefore face a housing market characterised by increasing affordability challenges and scarcity of supply.  Last week’s research from The National Housing Federation shows the scale of the problem – the country needs 340,000 new homes each year, a figure significantly above the government target, reinforcing the crucial need for a co-ordinated housing strategy.”

Doug Crawford, CEO of My Home Move, comments; “despite the recent downbeat mood and a monthly dip in the average UK house price, today’s data paints a picture of relative strength and stability underpinning the housing market. House prices have maintained a steady growth trajectory, not just through 2018 but also over the whole of the last year. In fact, annual growth has only dipped below 4% or above 5% in two of the last fifteen months. It’s encouraging that in a time of speculation about the wider economy, house prices have continued to plot a steady course.

“What we’re left with is a growth trend in UK house prices that is somewhere below the boom years of 2014 to 2016 – which is welcome news for first-time buyers – but noticeably stronger than the 2011-2013 period, which will reassure homeowners. The general appetite for homeownership is undiminished, and we are entering the time of year ahead of the summer holiday season where good weather can help prompt aspiring buyers to put moving plans into action.

“Clearly, it will take more than rising temperatures to fix the ongoing gap between housing supply and demand. In the meantime, there is no shortage of appealing mortgage deals to help consumers, who will also be helped by recent wage growth and the Bank of England’s continuation of the 0.5% interest rate.”

Thomas Fisher, economist at PwC, said: “Today’s release from the ONS and Land Registry shows that UK house price growth continued to falter in March, while London house price inflation remained negative with the weakest growth rate since 2009.

“While house price inflation of 4.2% in the year to March 2018 is the same as the growth in house prices in the year to February, the shorter-term month-on-month price changes point towards weakness in the market. Across England, house prices in all but one region, the East of England, fell between February and March. For the UK as a whole, average house prices fell 0.2% from the month before.

“For London, annual house price inflation turned negative at -0.7%, the weakest growth rate since September 2009 in the aftermath of the financial crisis. The London housing market has been weakening ever since the Brexit vote in mid-2016 and this shows no signs of letting up yet.

“The growing consistency of house price weakening across regions means that risks are weighted to the downside for the remainder of 2018. We anticipate that UK average annual house price growth in 2018 is likely to slow to less than 4%.”