UK property growth rate being hampered by uncertainty

UK residential property prices rose by 0.4% in July, according to the most recent data released from the Halifax.

However, during the three-month spell between May to July, they were down by 0.2%, while annually, prices were up by just 2.1%.

Property Prices

The report shows that the average price of a property is now £219,266. While the property is still growing, it is doing so at a slower rate than many observers expected. In fact, the annual rate of growth is at its lowest since April 2013, when it stood at 2%.

Nationally, house prices in July 2017 were 10% above the peak seen in August 2007, with the average price now 42% greater than the low point seen in April 2009.

Unsurprisingly, London continues to play home to the country’s most expensive property locations on a per square meter basis. The average price per square meter in Britain has risen by an eye-watering 236% in the last 20 years, from £672 in 1997 to £2,260 in 2017.

Russell Galley, Managing Director of Halifax Community Bank, said: ‘House prices continue to remain broadly flat, as they have since the start of the year. Prices in the three months to July were marginally lower than in the preceding three months, while the annual rate of growth has edged down from 5.7% in January to 2.1% in July, the lowest rate since April 2013.

‘The rise in the employment level by 175,000 in the three months to May helped push the unemployment rate down to 4.5%, the lowest since June 1975. However, this improvement in the jobs market has not, as yet, boosted wage growth, resulting in earnings rising at a slower rate than consumer prices,’ he explained.[1]

Spending

Continuing, Mr Galley said: ‘This squeeze on spending power, together with the impact on property transactions of the stamp duty changes in 2016 now being realised, along with affordability concerns, appear to have contributed to weaker housing demand.’

‘However, a continued low mortgage rate environment, combined with an on-going shortage of properties for sale, should help continue to support house prices over the coming months.’[1]

UK property growth rate being hampered by uncertainty

Uncertainty

Jeremy Duncombe, director of the Legal & General Mortgage Club, suggests that the market is resilient in the face of both political and economic uncertainty driven by Brexit. However, he feels that a long-term plan to address Britain’s chronic lack of supply remains crucial.

Mr Duncombe feels that the, ‘Government and industry must come together, and soon, to make a conscious effort to resolve the housing crisis and create enough homes for our growing population, across all tenures, renters and buyers.’[1]

Russell Quirk, Chief Executive Officer of eMoov, believes the figures are positive, noting: ‘Although prices are still down on the previous quarter and price growth is likely to remain fairly subdued for the remainder of the year, they continue to be up on an annual basis and given the current seasonality an increase no matter how small is a good sign during the peak of the summer months.’[1]

[1] http://www.propertywire.com/news/uk/uk-property-prices-edge-growth-still-hit-political-economic-uncertainty/