House prices up 6.7% in year to December

The most recent ONS data on house prices in Britain indicate a rise in values in the year to December 2015.

However, the 6.7% annual rise recorded was down from the 7.7% seen in November of the same year.

Additionally, the report shows that annual house price inflation stood at 7.3% in England, 1.0% in Wales, -0.2% in Scotland and 1.5% in Northern Ireland.

Drivers

Data from the report shows that yearly price increases in England were driven by rises in the East (9.7%), London (9.4%), and the South East (8.8%). Taking out London and the South East, prices have risen by 5.1% in the year to December 2015.

Also, prices paid for property in December were 6.4% higher on average than in December 2014. Owner-occupiers saw prices increase by 6.9% over the same period.

Paul Smith, CEO of haart estate agents, said that, ‘today’s data displays another considerable annual uplift in average house prices across the UK, in part driven by increased levels of competition at the end of last year as buy-to-let investors sought to complete on their second home purchase in anticipation of the 3% stamp duty surcharge coming into effect in April.‘[1]

‘As we reach mid-February there is little chance of any investor, especially where the transaction is part of property chain, being able to complete by April and as a result this market anomaly is tailing away,’ Smith continued.[1]

Healthy

Smith went on to say however that, ‘we are still seeing healthy levels of activity in the property market, across both sales and lettings. One of the ongoing problems last year was a shortage of homes, coupled with a high appetite for home ownership, but the New Year has brought with it enhanced levels of activity and the volume of properties put up for sale has increased 5% annually.’[1]

House prices up 6.7% in year to December

He believes, ‘the biggest hurdle to an efficient market is a shortage of professional skills,’ and says, ‘we are finding there are not enough specialists such as surveyors and lawyers to cope effectively with the renewed levels of activity and professional bodies must implement ways of encouraging more talented people into their fields.’[1]

Mismatch

Richard Sexton, director of chartered surveyor e.surv, observed, ‘there seems to be something of a mismatch within the UK housing market at the minute. Mortgage lending remains healthy, reaching its highest peak in nine years in January. A buy-to-let rush to beat April’s stamp duty changes, is part of this story, spurring a notable lending lift.’[1]

‘Buyers prospects appears healthy too. With low inflation, rising employment and wages boosting savings, potential home-movers should have more options in the housing stakes and be in a better position to pick and choose. But while lending and personal finances aren’t holding aspiring homeowners back-rising prices certainly are,’ he added.[1]

Solving the problems

Concluding, Mr Sexton noted, ‘for these prices to be fully tackled, supply problems need to be confronted. And crucially, more people need to be encouraged to move. Stamp duty costs, lack of stock and higher prices are deterrents to would-be purchasers. As a result, people are widening their search areas and seeking out new potential locations-leading to increased popularity in the East and South East. The appeal of these areas will only grow as those locked out of London look elsewhere.’[1]

[1] http://www.propertyreporter.co.uk/property/uk-house-prices-gain-67-says-ons.html