The latest report from LSL has shown that the UK housing market remained resilient during May. A very slight rise in the annual house price rate (from 2.1% to 2.2%) put an end to 11 months of falls.
According to the data, the positive performance in May means the market has narrowly avoided a full year of slowing house price growth. On a monthly basis, prices were flat with no change on April.
The average house price in England and Wales is recorded at £305,654, up more than £6,000 on a year ago, when prices remained below the symbolic £300,000 mark. Transactions are down on the levels of last year, however, by 6% in the first five months compared to 2017.
Despite the lack of movement in prices, there is one big change in the market this month: London and the South East are no longer a brake on the market. Taking into account these two regions, there was a 2.2% annual price growth – taking them out of the equation, the growth rate is lower – at 2.1 %. It reverses the trend of most of last year.
This is partly due to a change in methodology, which better captures sales of new build properties. These tend to cost more than existing homes and have a particularly strong impact on the average price in London. The change also reflects a recovery in the capital which has strengthened after months of declines – even if transaction levels remain substantially lower than last year. London is showing average annual growth higher than five regions in the UK (including the South East) and equal to the West Midlands (2.9%), putting it mid-table in England and Wales in terms of growth.
This also means that every region in the UK now shows positive annual price growth for the last 12 months.
Oliver Blake, Managing Director of Your Move and Reeds Rains estate agents said: “Whilst the market may seem subdued, we should welcome the fact that every region in the UK is still growing and that the London market seems to be shaking off its malaise.”
The revised figures in London, taking into account new build properties, show annual growth of 2.9%, the lowest since March 2012. Prices also fell on a monthly basis, down 0.3%, taking the average house price in the capital to £636,947.
A number of London boroughs are recording big falls over the 12 months to April 2018. They include the City of London (down 24.9%, albeit on a small number of sales), Southwark, down 19.1% (largely as a result of high value properties sold the year before); and Wandsworth, down 13.1%. Growth has been more modest, with only Kensington and Chelsea, the most expensive borough, recording double-digit growth, up 10.4% to £2.17 million. The next highest increase over the year was Lambeth, where prices increased 5.8%.
Overall, 24 London boroughs have seen prices fall over the year, and just nine have seen them rise: four in the top third of the market; four in the bottom third; and just one in the mid-priced boroughs.
The impact of new builds on the market in London is clear when analysing the prices paid for new builds against existing properties in 2017. This was particularly pronounced for flats, where new build flats sold at an average premium of almost a third (32.3%). They also made up a substantial proportion of sales of all flats, accounting for more than a quarter (26.4%), whereas new builds accounted for just 2.4% of sales of detached properties.
In the regions, Wales continues to top the tables for annual price growth, with prices up 5.2% over the year. In Monmouthshire prices have risen 13.9%, with a new peak average price of £291,344; likewise in the Vale of Glamorgan prices are up 11.6% to £269,609. The two are the most expensive areas in Wales, with prices well above the Welsh average of £184,348. Cardiff, which ranks third, also saw strong growth, up 9.5%.
Much of this is still down to the introduction of the new Land Transaction Tax introduced in April. Since the growth calculations are based on three-month averages, they include sales in March 2018 by buyers rushing to beat the added cost for higher priced properties. Some cheaper areas have also seen good growth, though – notably Carmarthenshire, with prices up 12.6% to £163,633. Wales has also, however, seen price falls. In fact, of the 33 areas to see prices drop over the last year, outside London, eight are in Wales.
That still means that 75 of England and Wales’ unitary authorities continued to see annual growth, however, as did all nine regions, in addition to London. After Wales, it’s the North East that’s the star performer, with prices up 4.5%, bolstered by strong performances in Northumberland (up 9.0%) and Tyne and Wear, up 6.1% and another of the 14 areas to record a new peak average price in the month.
Another strong performer was the East Midlands, with prices up 2.6% annually. It is also the only region to see annual price increases in all its unitary authority areas, led by Rutland, up 9.3%, Northamptonshire (4.1%) and Leicestershire (up 3.4% to a new peak of £244,633).
At the other end of the scale, growth is weaker in Yorks & Humber, at 1.2% annually, and, particularly, in the South East, where prices are up just 0.6%. The latter is home to Windsor and Maidenhead, the highest priced authority outside London and also the one to see the biggest annual fall in prices: down 11.3%. Even in the South East there are bright spots, though, with the Isle of Wight, Medway and Oxfordshire all setting new peak average prices in April.
Peter Williams, Chairman of Acadata and John Tindale, Acadata housing analyst, comment: “After eleven months of falling – or stagnant – rates of annual house price growth, there is the first sign of an upturn in May with the glimmer of an increase in the rate, albeit by the narrowest of margins. The average annual rate of increase now stands at 2.2%, a rise of 0.1% on April when including London and the South East. However, even this almost insignificant rise disappears when we exclude these two regions. This is the first time in 10 months in which the rate of inflation is higher when including London and the South East, rather than without these two areas.
As we discuss below, our analysis now takes the impact of new build sales fully into account, but this does not explain this slight uptick – the London market has strengthened after months of decline. Average annual house price growth peaked in February 2016 – at 9.0% – including London and the South East, or at 6.7% without, just prior to the introduction of the 3% surcharge on second homes and buy-to-let properties.
Subsequently, the rate of price growth has been falling, and at a near constant rate since September 2017.”
Original Source: Property Reporter