The Property Market is Biding its Time, According to Your Move

The UK property market is biding its time, according to the November House Price Index from Your Move.

House prices across the country largely continue to flatline, with the rate of annual growth falling consistently since August. It now stands at an average of 0.9%, which is well below the rate of inflation and the lowest since April 2012.

This leaves the average property value in England and Wales at £305,522, following a £2,724 increase on November 2017.

Despite weak price growth, property transaction levels rose slightly in November, by 2.5% on a seasonally adjusted basis. With an estimated 82,500 sales, they are at their highest for the month in three years.

Key insights

In the year to September, while the number of loans for first time buyers was up marginally (0.4%) on the same period last year, the amount for home movers was down by 3.6%.

Perhaps most tellingly, the number of buy-to-let mortgages fell by 13.0%. This could be an indication that a wait-and-see approach is now being adopted, particularly as the end of the year approaches and the nation waits with bated breath on the outcome of Brexit.

Longer-term issues also play a role, however, and affordability remains a key concern. The greatest growth in transactions has been in the cheapest region in England – the North East – with sales in the three months to October up by 7% on the same period of 2017.

By contrast, the South East (the most expensive region outside of London) saw transactions fall by 4%. The capital bucks the trend, with sales up by 2%, but it also saw price falls earlier than other regions.

More widely, the Resolution Foundation’s report on the bank of mum and dad earlier this month shows the continuing difficulty that the young have funding their own home purchases. It showed that those without parental property wealth are, at the age of 30, roughly 60% less likely to be homeowners than those whose parents are homeowners.

Region-by-region

The top three regions for house price growth remained unchanged in November. The West Midlands still lead the way, with annual growth of an average of 3.7%, supported by a strong performance in the West Midlands combined authority, which includes Birmingham. With prices up by an average of 5.3% over the year, it’s among 13 areas to set a new peak in the month.

Neighbouring East Midlands, meanwhile, is also growing strongly, with prices up by an average of 3.5% annually. Rutland saw growth of 10.8% over the 12 months to November, while Derby (6.1%), Leicester (5.7%), Nottinghamshire (3.9%) and Nottingham (2.0%) all set new peak average property values.

Despite the performance of Rutland and others in the Midlands, it is Torfaen in Wales that has recorded the highest growth over the last year, at an average of 15.6%. This was helped by the recent sale of the highest priced property in the area, for £620,000, where the average home costs just £171,708. It is also supported by demand for properties from those working in the Bristol and Gloucestershire areas.

More generally, Wales also continues to be the only area outside the Midlands that is outpacing inflation (2.2% in October), with the average price up by 2.7% annually.

As well as Torfaen, it has seen strong growth in Caerphilly (8.8%), Carmarthenshire (7.2%) and Powys (6.4%), all of which set new peak average prices in November. The big cities of Newport (6.2%) and Swansea (3.7%) also show above average growth for the region, although prices in Cardiff were only up by 2.2% annually.

At the other end of the scale, prices in the East of England are now down on an annual basis for the first time since March 2012. While Southend-on-Sea and Thurrock still show good growth (4.1% annually for both, with the latter recording a new peak), that’s more than offset by falls in Suffolk (-0.8%), Luton (-1.0%), Bedfordshire (-1.3%) and, most significantly, Cambridgeshire (-4.6%).

It is, however, the only region to see prices falling on an annual basis, and the majority of unitary authorities continue to see growth, with prices up in 74 of the 108 areas in England and Wales outside of London.

London

The average house price in London increased by 1.3% in October – nominal growth, but a real fall compared to inflation. The average property in the capital was priced at £622,508.

On an annual basis, prices fell in 21 of the 33 London boroughs, with the City of London (7.8%) leading those that bucked the trend. Three of the top five priced boroughs recorded double-digit declines: in Kensington and Chelsea – the most expensive borough – prices fell by 16.5%; in the City of Westminster, they were down by 8.0%; while Hammersmith & Fulham saw declines of 10.5%.

On the other hand, prices continue to grow strongly in both Merton and Lambeth (7.5% and 7.6% respectively).

Overall, there are pockets of strength and weakness across London. Prices in Tower Hamlets fell by an average of 13.7%, while, in Hackney, they’re up by 5.6%, with both areas roughly mid-table in terms of property values.

At the lower end of the market, Bexley, and Barking and Dagenham still show nominal growth (1.7% and 0.7% respectively), while Newham has seen prices drop by 6.7%. Largely, however, areas to the east of the capital, where properties tend to be more affordable, are most likely to be seeing modest growth.

Oliver Blake, the Managing Director of Your Move and Reeds Rains, comments: “Despite the current economic uncertainty, it’s encouraging to see that there is still some increase in transaction levels and that, whilst house price growth is relatively flat, it means for first time buyers, for example, the news remains positive.”