Nationwide has revealed that the average price of a home in the UK now stands at £214,946. And average yearly growth remains below 1% for six months straight.
Robert Gardner, Nationwide’s Chief Economist, comments: “Annual house price growth remained below 1% for the sixth month in a row in May, at 0.6%.
Survey data suggests that new buyer enquiries and consumer confidence have remained subdued in recent months. Nevertheless, 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.
Housing market trends are likely to continue to mirror developments in the broader economy. While healthy labour market conditions and low borrowing costs will provide underlying support, uncertainty is likely to continue to act as a drag on sentiment and activity, with price growth and transaction levels remaining close to current levels over the coming months.
Deposit barrier key for many potential buyers
“First time buyer numbers have continued their steady recovery in recent quarters, reaching 359,000 in the twelve months to March, just 10% below 2006 peaks. The trend is partly due to robust labour market conditions, with employment rising at a healthy rate, and earnings growth slowly gathering momentum.
“Low borrowing costs have also provided important ongoing support. Even though house prices remain high relative to average incomes, the cost of servicing the typical mortgage as a share of take home pay has remained close to or below long run averages in most parts of the country.
“The main exception is in London, where a period of rapid house price growth in the three years to 2015 means that monthly mortgage payments would also be unaffordable for a large proportion of the local population.
“Outside of London and the South East, raising a deposit appears to be the main challenge for most prospective first time buyers. The chart below shows the average time it would take someone earning the typical wage in each region setting aside 15% of their take home pay each month to save a 20% deposit to buy the typical first time buyer property.
“Even in Scotland and the North, where property appears most affordable, it would still take someone earning the average wage and saving 15% of their take home pay each month more than five years to save a 20% deposit. In Wales and Northern Ireland, it would take prospective buyers nearly 2 seven years, and almost eight for people living in the Midlands.
“Reflecting the trend in overall house prices, the deposit challenge is most daunting in the South of England, where it would take an average earner a decade or more to amass a 20% deposit.
“Again, the pressures are most acute in the capital, where someone earning an average income would take more than 15 years to save a 20% deposit on the typical London property (even longer than was the case before the financial crisis when it would have taken over ten years)”.
In April, the number of property sales agreed per estate agency branch increased to the highest level seen since October, according to the latest data from the NAEA.
The number of sales agreed per member branch increased for the first time this year, rising from an average of seven per branch in March, to eight in April. This is the highest level seen since October 2018, when the same number of sales were recorded per branch. However, year-on-year, the number of property transactions remains the same.
The increase in sales continues despite the number of house hunters registered at ecah brand falling by10% in April, from 296 to 265. Year-on-year, demand was at the lowest level recorded for the month of April since 2008 when 237 house hunters were registered on average per branch. Housing demand also fell by a fifth (21%) from April 2018 when there were 337 prospective buyers per branch.”
New data from Rightmove for the month of May has shown an average of 0.9% (+£2,841) price increase for newly marketed property.
Miles Shipside, Rightmove director and housing market analyst comments: “Price increases are the norm at this time of year, with only one fall in the last ten years, as new-to-the-market sellers’ price aspirations are under-pinned by the higher buyer demand that is a feature of the spring market. Indeed the 0.9% monthly rise is consistent with the previous two years’ average rise of 1.0% over the same period. What will seem inconsistent to some, given the ongoing uncertainty of the Brexit outcome, is that four out of eleven regions have hit record highs for new seller asking prices.”
Prospective buyers in Wales, the West and East Midlands, and the North West are being confronted with average prices of property coming to market at all-time highs. While the national rate of increase is virtually flat at +0.1% compared to a year ago, these regions have considerably higher prices than at this time last year, with Wales breaking through the £200,000 barrier for the first time. By contrast, London and its commuter belt (the South East and East of England regions) have seen year-on-year falls.
Shipside adds: “Buyers looking in Wales are faced with newly-marketed property prices that are 4.1% higher than 12 months ago, with the West Midlands at 3.0%, the East Midlands at 2.5%, and the North West at 2.1%. These increases are the result of a combination of strong demand, buyers’ affordability headroom, and a continuing shortage of suitable properties. Agents in these areas say that Brexit concerns are not really on the agenda of home-movers; they are more concerned with satisfying their housing needs.”
Compared to the rest of the UK, property owners in the regions which have reached new record prices seem to be overcoming hesitancy to come to market. Their average number of new sellers so far in 2019 is holding steady compared with last year, at just 0.3% down. In contrast the remaining seven regions are seeing new listing numbers for the year to date down by an average of 6.5% compared with the same period in 2018.
Shipside concludes:”Activity breeds activity and a greater choice of fresh properties in these record-setting regions helps to spur buyers into action, especially if they have a property to sell. This in turn adds another new listing that might then tempt another buyer, in a virtuous circle. And in much of the rest of the country, despite the ongoing political uncertainty, agents are reporting that the lure of the right property at the right price still attracts good interest. In spite of some of the challenges in the market, interest in property remains very high.
People’s ongoing desire to satisfy their pent-up housing needs means that on average someone contacts an agent on Rightmove every second.”
No Letting Go the inventory service provider latest research indicates a possible rise in tenant activity from June 1 due to many tenants will be looking to move after this date in order to avoid paying upfront fees and benefitting from capped holding deposits.
Nick Lyons, CEO and Founder of No Letting Go, had this to say: “It’s no surprise to see shrewd tenants delaying moves until after the fees ban and deposit caps are introduced on June 1.
The upfront cost of moving between rental homes can be high – particularly in London and the South East – so renters will do anything they can to keep costs down, even if that means putting their move on hold for a few months.”
Lyons says that while a recent dip in activity may have allowed agents and landlords some extra time to prepare for the new system, they should be braced for a significant uplift in activity from June onwards.
“Tenants are likely to have continued searching for properties over the last few months and will be keen to push their moves through as quickly as possible so they can be settled in their new property for the majority of the summer months.”
Halifax latest data has shown that average house prices rose by 1.1% in April
Russell Galley, managing director of Halifax, said: “The average UK house price now stands at £236,619 following a 1.1% monthly rise in April, as demand and supply of housing remained subdued for another month.
The index has seen a weaker pace of growth over the last three years, which is consistent with the easing of transactions volumes and housing market activity reflected in RICS, Bank of England and HMRC figures.
Looking further back, this April also marks 10 years since the lowest point of the Halifax house price index following the financial crash in 2008. Over the past decade annual house price growth has seen the average price increase by £81,956, or an average rise of 4.3% each year.”
Nationwide latest figures released has shown annual house price growth settled at 0.9% during April.
Robert Gardner, Nationwide’s Chief Economist, said: “UK house price growth remained subdued in April, with prices just 0.9% higher than the same month last year.
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. Measures of consumer confidence weakened around the turn of the year and surveyors report that new buyer enquiries have remained subdued.
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 supply and demand in favour of buyers in recent months. April marks the fifth month in a row in which annual house price growth has been below 1%.
NAEA Propertymark has revealed that, during March, the number of houses available to buy fell to the lowest level ever recorded.
Mark Hayward, Chief Executive, NAEA Propertymark said: “Despite the fact that activity in the housing market increased in March, the levels of supply and demand recorded aren’t where we would expect them to be at this time of year. It’s clear buyers and sellers are still feeling cautious and holding off on making any decisions in light of the current political climate and economic uncertainty. However, recent house price data indicates we might see confidence in the market grow as house prices slowly begin to return to previous levels and we edge closer to the summer months.”
Savills latest findings has shown that for the government to meet the target for 300,000 homes a year target it will only be able to do so if funding for affordable housing is increased.
Kate Henderson, ceo of the National Housing Federation, said: “Without government investment in affordable housing, it just won’t be possible to build enough homes to ensure that everyone can have somewhere stable and affordable to live.”
Emily Williams, associate director for residential research at Savills, commented: “Private sector housebuilding for market sale has underpinned the rapid expansion in housing supply since 2013, including affordable housing delivery through Section 106.
But that growth is slowing against market headwinds. Increased grant funding would widen the range of tenures being built, accelerating the speed of market absorption and therefore the build out of sites.”
Land Registry has revealed that average house prices in the UK saw a 0.6% increase in the year to February.
- The average house price in England increased by 0.4%
- Wales increased by 4.1%
- Northern Ireland house prices increased by 5.5%
- London prices fell by 3.8% over the year
- South East prices fell by 1.8%.
- The North West showed the highest annual growth, with prices increasing by 4.0%,
- West Midlands at 2.9%.