Annual house price growth falls in England for first time since 2012
Annual house price growth in the UK was just 0.7% in March and month on month prices hardly increased at all, up 0.2%, taking the average price to £213,102, according to the latest lender index.
Year on year prices fell in London and the South East with England as a whole recording its first annual price fall since 2012, down 0.7%, the data from the Nationwide index shows.
However, Robert Gardner, Nationwide’s chief economist, said that indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, even though survey data suggests that sentiment has softened.
Robert Gardner said:
‘Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have continued to decline, falling to their lowest level since 2008 in February. While the number of properties coming onto the market has also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.’
He also pointed out that Northern Ireland remained the strongest performing market in the first three months of 2019, although annual price growth softened to 3.3%, from 5.8% in the last quarter of 2018. Scotland saw a slight pickup in annual price growth to 2.4%, while Wales saw a marked slowing in growth to 0.9% from 4% in the previous quarter.
London was the weakest performing region in the first quarter with prices 3.8% lower than the same period of 2018, the fastest pace of decline since 2009 and the seventh consecutive quarter in which prices have declined in the capital.
‘This trend is not entirely unexpected, however, as it follows several years of sustained outperformance which left affordability more stretched. Policy changes that have impacted the buy to let market in recent years are also likely to have exerted more of a drag in London, given that the private rental sector accounts for a larger proportion of the housing stock in the capital than elsewhere in the country.
‘More widely, prices across the South of England, and to a lesser extent in the Midlands, are also well above pre-financial crisis peaks, while those in Northern England, Wales and Scotland are still close to 2007 levels. However, prices in Northern Ireland are still more than 35% below the all-time highs recorded in 2007.’
A seven consecutive quarterly drop and the fastest rate of decline in a decade really paints a dire picture of the current situation across the London property market, according to Director of Benham and Reeves, Marc von Grundherr.
Marc von Grundherr added:
‘Home owners are now some £20,000 worse off than they were this time last year,’ he said but revealed he is confident that it is only a matter of time before the market improves in London.
‘For those looking to London as an investment the current climate provides an excellent opportunity to not only secure a good deal, but to see a return over the coming years and, while domestic home buyers sit on their hands, there continues to be a consistent level of interest from overseas despite the war waged on the buy to let market.’
Guy Gittins, managing director of Chestertons, said that it was almost inevitable that the uncertainty of Brexit would drag property prices down, but he believes this is temporary.
Guy Gittins said:
‘Over the medium and long term, London property has outperformed most other asset classes and we believe it will remain a solid investment, regardless of the Brexit outcome,’ he added.
Slow growth is set to continue, according to Sam Mitchell, chief executive officer of online estate agents Housesimple.
Sam Mitchell explained:
‘This is likely to be the pattern for the foreseeable future, until the European Union situation is resolved at least, as the impact of protracted Brexit negotiations drags more heavily on the London market.
‘The market would have preferred a decision one way or the other. Instead, we are now in this state of short term limbo leaving many buyers and sellers unsure what to do. Normally, we would expect to see a spike in transaction levels around this time as we enter the traditional Spring bounce period, but with the extension to the EU leaving date, the bounce is likely to be a little subdued this year.
‘Saying that, savvy sellers could see this as a short window of opportunity to steal a march on the competition, as more homeowners choose to wait and see what happens with Brexit negotiations in the next few weeks before marketing.’
Kindly shared by Property Wire