UK house prices: Growth rate halves as south east faces ‘reality check’
The annual rate of growth of UK house prices has slowed to its worst rate since September 2012, according to public data released today, as prices in the south east plummeted.
Average UK house prices grew just 0.7 per cent in the year to July, amounting to just half of June’s 1.4 per cent rise, the Office for National Statistics (ONS) said.
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Prices dropped 2.9 per cent year-on-year in the north east of England, while south east homes lost two per cent of their value, the figures showed.
That left the average UK house price at £232,710, with prices rising the most in Wales, where homes grew 4.2 per cent in value year on year.
South east house prices crumble
Lucy Pendleton, founder and director of independent estate agents James Pendleton, said after London’s dramatic fall from grace in the property market, the south east now faces a market correction.
“Until now it was London undergoing a bit of a reality check but the south east has stolen the capital’s crown as the biggest loser in dramatic fashion,” she said.
“The property market across the whole of the south of England has seen annual falls of late and in a funny way that’s a good thing.”
“It is encouraging sellers to be more realistic, particularly those who are selling in London and buying elsewhere,” Pendleton added.
Could London house prices recover?
“It had been tempting to think of the capital’s contraction as a blip but London is no longer the black sheep it once was,” the estate agent said.
Jeremy Leaf, a north London estate agent and a former Rics chairman, said prices are slowly rising in London, suggesting the green shoots of a recovery.
“There has been some recovery in the property market in London,” Leaf said.
“Rather than being the worst performing area, it is starting slowly to regain some of its attraction as buyers and sellers look beyond Brexit and try to get on with their lives.”
But PwC economist Jamie Durham warned that the south east and London continued to drive the overall decline in UK house prices, despite the north east’s drop.
London house price growth has now fallen for 17 consecutive months, he said.
“Nonetheless, the capital remains the most unaffordable in the country at an average price of £478,000,” Durham added.
“Among other factors, the capital and surrounding areas are particularly affected by Brexit uncertainty, and price growth is likely to remain weak or negative until this uncertainty subsides.”
The Royal Institution of Chartered Surveyors (Rics) reported that new buyer enquiries improved slightly in July, but this was not enough to boost demand.
“Despite this modest improvement in demand, newly agreed sales edged down a fraction across the UK over the month,” HM Land Registry said today.
“Alongside this, new instructions to sell were unchanged for the second successive report. This follows a string of 11 consecutive monthly declines in fresh listings.”
In England alone, house prices rose just 0.3 per cent in July, ONS data showed.
No confidence in Brexit process
Tomer Aboody, director of property lender MT Finance, warned that the UK housing market has softened amid “no confidence” in Boris Johnson’s government.
“Values are not really down as such – there are just fewer transactions because of the uncertainty over Brexit and therefore a smaller marketplace,” Aboody added.
“Until Brexit is sorted and Boris Johnson has either done a deal or we have a hard Brexit, there is not likely to be much movement.”
“The band aid needs to be ripped off and we need to get on with it,” Aboody said. “There is likely to be some financial stimulus afterwards, whether that is in the form of stamp duty reform, or reduction to business rates, something that will bring confidence and activity back.”
Time to accept it’s a buyers’ market?
David Westgate, CEO at Andrews Property Group, added that sellers are having a hard time facing the reality that momentum is with buyers.
“There’s no shortage of properties coming to market or applicants looking,” he said.
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“The problem is that offers are typically being put forward at around 10 per cent below asking price and sellers are simply refusing to budge.
“It’s a buyers’ market but too many vendors are being stubborn and are failing to accept that.”
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