UK residential property market at its most inconsistent for years says new report
House prices are continuing to increase slowing in the UK but the residential property market is now at its most inconsistent for many years, according to a new piece of research.
While the market’s performance is underpinned by slow growth across all regions, the report from Carter Jonas reveals polarising regional differences based on their respective house price to earnings ratios.
Yorkshire and the Humber has recorded the highest rate of annual house price growth at 3.6%, followed by 3.4% in the West Midlands and 3% in Wales, while there were declines of 1.9% in London and 0.4% in the South East, the areas with the highest house price to earnings ratios. Prices were flat in the East of England.
The rental market is proving more buoyant with an average increase of 1.2% across the UK, but landlords are still leaving the market, the annual report from Carter Jonas also shows.
The report says that the ongoing juxtaposition between rising house prices and falling wages has led to the continuation of buyers looking elsewhere within their regions in search of better value for money, causing inconsistencies in markets at a local level.
While Oxford has posted significant growth of almost 5%, areas to the West and South of the county have witnessed annual declines. It is a similar story in Bath, where growth of 4% starkly contrasts with nearby Wiltshire, which has posted a decline of 0.5%.
The continued reduction in transaction volumes from last year is reflective of the impact that these micro-inconsistencies are having on house prices and market activity, the report points out.
Lisa Simons, head of residential sales at Carter Jonas, said:
‘The UK is still trying to navigate an uncertain political and economic climate with a recent change in government and a potential no deal Brexit looming in the background. It is therefore no surprise that the market is a little bit slower, but overall growth is a positive indicator.
‘While market performance continues to fluctuate among regions at a level never quite seen before, it is important to recognise that the more affordable areas such as Yorkshire and the Humber continue to harbour opportunity and appeal.
‘However, the fluctuations in markets that we are seeing are more complex than a simple north-south divide. The imbalance between buyer demand and housing stock at more of a ‘micro level’ reveals a market that is diverging. Buyers are fundamentally in search of value and the market is being supported by first timer buyers, who are currently the most active group in the market.’
The report says that the buy to let market has continued to contract, with just 15,200 mortgages approved in the first three months of this year, some 7% fewer than the same quarter in 2018 and 17% fewer than 2017.
However, UK rents have increased by an average of 1.2% annually with the East Midlands posting the highest growth of 2.1%, and London and the North East the least at 0.5% and 0.45 respectively.
But the report does point out that the Government’s legislative crack down on landlords and agents has had market wide consequences. The report indicates that landlords are continuing to leave the market and that the number of new landlord instructions fell again this year, which has resulted in less stock in the marketplace.
‘The weight of heavy legislation is continuing to take its toll on the buy to let market. Whilst our business fully supports the Government’s ambitions to improve standards for both landlords and tenants, the sheer volume of regulation only adds pressure to an already stunted supply of housing. This, in turn, has increased the cost of existing stock.
‘The Government would do well to prioritise stabilising the private rented sector alongside Build to Rent, at least while the latter is still in its infancy. With 4.5 million households currently in the private sector and only 140,000 build to rent units built or under construction, this new pipeline of housing caters for just 3% of households currently renting privately.
‘The Government needs to consider how they can better support landlords as well as tenants, in order to restore the balance between supply and demand.’
Kindly shared by Property Wire