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Slowing house price growth hides divided market

  • 16/04/2018
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Slowing house price growth hides divided market
House price growth slowed for the tenth consecutive month in March – rising just 0.7% compared to 5.1% in March 2017, according to the Your Move England and Wales House Price Index.

In fact, the average UK house price has barely moved since October, hovering at around £301,000 for the last six months to measure £301,490 in March.

However, these figures mask a divided national market with London and the South East dragging down the rest of the country, where prices rose by an average of 2.6% on the year.

Outside London, it is hard to spot the slowdown in property prices, the report of completed sales noted.

At least nine of the major cities in England and Wales set new peak prices in February, with the South West, Merseyside, Greater Manchester, East Midlands, the West Midlands conurbation and South Wales all performing strongly.

Transactions levels were down compared to last year with an estimated 63,500 completed in March, although this was 6% higher than February.


London slips further

In London, the contraction which had been largely limited to the top end of the market and the highest valued boroughs has now spread to mid-market, with those mid-range boroughs seeing notable falls.

Your Move noted that cheaper property in London appeared to be remaining more robust, with the 11 lowest priced areas accounting for almost half the 11 boroughs to still report increases in the last year.

Overall it added that there was significant strength across the market in England and Wales with almost three quarters (79 of 108) of unitary authority areas recording price rises over the last year, and 35 setting a new peak average price in February.


96.7% of asking price

These results were largely backed-up by data from Rightmove, which publishes asking prices of newly listed properties.

It also noted a slowing down in newly listed prices, but not such a severe one, with a 0.4% monthly increase in April to £305,732, which was up by 1.6% compared to April 2017.

This surpassed the previous national high of £304,943 set in July 2017 by 0.3%, with six out of eleven regions also hitting new peaks.

However, Rightmove warned that the subdued 1.6% annual rate of price increase meant many buyers were increasingly price sensitive.

It added that on average sellers were achieving 96.7% of their final asking price, a gap of just over £10,000 on the current national asking price, though this varied by region, location and property.


Buyer confidence changing

Brian Murphy Head of Lending for Mortgage Advice Bureau agreed that there was a continued emergence of a diverging market between London and the South East and the rest of the country.

However, he noted that properties being marketed at an ambitious price were taking much longer to sell, even in areas of high demand, and that the vendor also opened up the potential of a down-valuation.

“It’s also interesting to note that the Rightmove report seems to suggest that buyer confidence – and in turn, asking prices – would appear to increase the further out from the capital that one looks,” he said.

“Certainly in comparative terms, the time taken to secure an offer would seem to be far quicker in other areas of the UK, such as Scotland, the West Midlands and the South West, than it is in London.

“Then there is also the fact that across the rest of the UK the average completion price achieved versus asking price would appear to have increased in the last four years, whereas in the capital the same metric would appear to be in negative territory,” he added.

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