UK property market slows, annual growth at lowest since May 2013
House prices in the UK fell by 0.1% in the second quarter of 2017 and annual price growth fell to 2.6%, according to the latest lender index.
Prices also fell month on month in June, taking the overall average to £218,390, the data from the Halifax shows. It also shows that annual growth is now at its lowest since May 2013.
‘Although employment levels continue to rise, household finances face increasing pressure as consumer prices grow faster than wages. This, combined the new stamp duty on buy to let and second homes in 2016, appears to have weakened housing demand in recent months,’ said Martin Ellis, Halifax housing economist.
‘A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale should help continue to underpin house prices over the coming months,’ he added.
Detail from the index show that the 0.1% fall in the second quarter was the third successive quarterly fall and this is the first time this has happened since November 2012 and June saw the first monthly fall since January.
According to the Halifax figures the most recent peak for annual growth was 10% in March 2016 but house prices in June 2017 were 9% above their August 2007 peak and the average house price of £218,390 is £63,727 or 41% higher than the low point of £154,663 in April 2009.
The number of first time buyers reached an estimated 162,704 in the first half of 2017, only 15% below the peak in 2006 of 190,900, according to the latest Halifax First Time Buyer Review.
The number of new buyers is up from 154,200 in the same period in 2016 and more than double the market low in the first half of 2009 of 72,700. This is the third time in four years first time buyer numbers have exceeded 150,000 and the first time since 2007.
The figures also show that 47% of all house purchases financed by a mortgage were made by first time buyers compared to 36% a decade ago.
Jonathan Hopper, managing director of Garrington Property Finders, believes that average prices are flat lining rather than falling, and this has dragged down the annual rate of growth to its lowest level for more than four years.
But he pointed out that in London it is a different matter. ‘The capital’s prime property prices have been under pressure for more than a year and we’re increasingly seeing astute buyers seize the opportunity to secure substantial discounts. But in many other areas the market continues its listless rise, with prices being propped up the lowest ever level of homes for sale,’ he said.
‘There may be healthy levels of intent among buyers, but with many discretionary sellers holding off on listing, supply is being choked and prices artificially supported. Nevertheless price growth is meandering and tentative at best,’ he added.
According to Jeremy Duncombe, director of the Legal & General Mortgage Club, it should be remembered that first time buyer are still struggling. ‘In London, some first time buyers are having to fork up over £100,000 for a deposit and that is not acceptable. Many would-be home owners are now turning to the private rental sector to find more affordable accommodation. Nearly a quarter of households are set to be owned by private landlords by 2021,’ he pointed out.
‘The lack of affordable housing is a problem that will only worsen if the Government doesn’t implement the revolution in housing policy it previously promised. With the general election over, we want to see a real push to build the thousands more homes that this country desperately needs, whether that be for prospective home owners or renters,’ he added.
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