London continues to apply the brakes to UK house price growth

For Sale & sold home

The latest data and analysis from UK Finance has revealed that, acronym ss the UK, average house prices saw a 1.4% rise in the year to March 2019.

According to the data, Yorkshire and the Humber showed the highest annual growth. Prices in the region saw an increase of 3.6% in the year to March, followed by the West Midlands at 3.4%.

The lowest annual growth was in London, where prices fell by 1.9% over the year to March, up from a fall of 2.7% in February.

The average house price in England increased by 1.1% over the year to March, up slightly from 1.0% in February. House prices in Scotland increased by 3.3% over the year, up from 0.5% in the year to February.

House price growth in Wales increased by 3.0%, down from 3.6% in February 2019. Northern Ireland house prices increased by 3.5% over the year to Q1 2019. Northern Ireland remains the cheapest UK country to purchase a property in, with the average house price at £135,000.

The property industry was quick to react to the news:

Mark Harris, chief executive of mortgage broker SPF Private Clients said, “While average house prices across the UK ticked up in March, this masked significant regional differences.

London continues to disappoint with the lowest annual growth and prices falling 1.9 per cent over the year to March but it could be argued that there was a need for a correction in the capital with property prices racing away and putting ownership beyond the reach of many ‘ordinary’ people. Even with these price corrections, London is still the most expensive place to buy property. There remains a significant gap between incomes and property prices, although with lenders keen to lend and offering good rates at high loan-to-values, there is a glimmer of hope for those struggling to pull together the necessary deposit.”

Daniel Levene, Head of Analysis at Cogress, had this to said, “England annual house price growth of 1.1% is marginally up on the previous month, however, it still sits significantly below inflation and is therefore continuing to show a contraction in real terms, as it has done since Q4 2018.

When you compare England annual house price growth in March to the highest growth achieved over the last four years (9.5% in March 2016) and the average over that same four year period (5.2%), you can see how far and fast the market has fallen in a relatively short time.

Per the March data, London is continuing to contract at -1.9%, albeit at a lower rate than in February (-2.7%). Looking further into the London Borough specific data, there’s still a strong correlation between year on year house price growth and lower value housing. For instance, Kensington and Chelsea is still the worst performing borough whilst areas like Newham and Hackney are proving to be much more resilient.

Conjecture would suggest that these boroughs are better stocked by the Government’s Help-to-Buy scheme, which has a maximum eligible house price of £600k.

Much is being made of Stamp Duty and Brexit sentiment discouraging householders from moving, the data clearly corroborates this. The number of transactions in England have dropped by over 12% (19% for London) year on year as people wait for further political and economic certainty.”

Shaun Church, director at Private Finance said, “UK house prices have witnessed a springtime boost, defying wider uncertainty to enjoy the uplift that normally comes at this time of year. In good news for first-time buyers, however, this rate of increase is much more moderate than witnessed in recent years.

With the postponement of Brexit, many buyers and sellers that were previously delaying their property ambitions have decided they can afford to do so no longer. Since the UK’s date of departure from the EU was pushed back until October, we’ve already witnessed a resurgence in activity that will help to add even greater buoyancy to house prices and the wider market over the course of the summer.

Deal or no deal, Brexit or no Brexit – for now it appears that the property market is progressing regardless. If this new found confidence can be maintained, it should allow the market to return to a stronger state.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman said, “Once again, we are seeing London acting as a drag on the rest of the UK housing market as despite improvements in affordability, almost record low mortgage rates and unemployment, combined with a shortage of stock. With prices down one month, up the next no real pattern has emerged.

On the ground, we are seeing pent-up demand drip-feeding back into the market but many sellers buoyed by significant equity are still finding it difficult to accept the realities of today’s new norm.”

Tomer Aboody, director of property lender MT Finance said, “While prices fell 1.9 per cent in the year to March in London, this was a better performance than the previous month’s figure of 2.7 per cent, suggesting that there is more confidence and people willing to proceed with their property purchases.

This is particularly true in the £2m to £7m/£8m bracket as anyone buying now is getting a 20 or even 30 per cent discount from the 2015/2016 peak. There is more value for money in property at this level and buyers may be able to afford what they couldn’t have dreamed of in the past.

Elsewhere, growth in property prices in the Midlands and north of the country shows confidence in projects like HS2, which will one day get off the ground. The north-south divide is narrowing with increased ability to travel between the regions for work and it means that it may be possible to live in cheaper parts of the country. The appeal of greener pastures and a better standard of living will mean those areas will go up in value and benefit from the investment of people on higher salaries moving out of London.

The government’s focus on London and the southeast has always been highly questionable and there is nothing wrong with living a bit further out, particularly when many people have been priced out of the capital perhaps for ever.”

Marc von Grundherr, Director of Benham and Reeves said, “Positive signs once again and the latest of a number of industry indicators that suggest the market is returning to good health.

While London continues to struggle a reduction in price growth decline is certainly a step in the right direction and the capital remains the most prestigious region of the UK where house price growth is concerned.

It’s important to note that the capital has also shouldered the majority of Brexit uncertainty, but as we’ve said time and time again, the returns to form are far swifter than the declines and we expect London will be back to full fitness before the year is out.”

Kevin Roberts, Director, Legal & General Mortgage Club said, “Political uncertainty continues to dominate the headlines, but for many buyers it has remained business as usual. Our research shows that more than two thirds (67%) of people looking to buy or sell in the next six months will go ahead with their plans to step onto or up the ladder. This is being helped by annual house price growth that is no longer outrunning wage rises, as well as schemes like Help to Buy and Shared Ownership which provide alternative routes to homeownership.

For borrowers who are still in the process of moving, speaking with an adviser could help them. These professionals have access to thousands of mortgage products, far more than available when going direct to a bank, making them well-placed to find the solution most suited to a borrower’s specific needs.”

Shepherd Ncube, founder and CEO of Springbok Properties said, “The first positive movement in the rate of house price growth in seven months will be warmly welcomed by homeowners across the UK and with a little help from the seasonal market bounce, it would seem that UK property is shaking off any lingering Brexit uncertainty.

This growth continues to be led by regional front runners with more affordable price tags and this will no doubt continues, however, it’s only a matter of time before we see more widespread growth across the board.

I think as a nation we’ve become bored of Brexit and so with no end still in sight, many buyers and sellers are returning to the fray, with this heightened market activity also helping stimulate price growth.”