UK residential property prices showing steady growth, latest index shows
UK house prices increased by 3.3% in the second quarter of 2015 compared to the previous quarter taking the average price to £200,280, according to the latest property price index.
It means that the quarterly rate of change has picked up following two successive falls and prices in the three months to June were 9.6% higher than in the same three months a year earlier, the data from the Halifax shows.
This was higher than May’s 8.6% and the highest quarterly rise since September 2014 when it was 9.6%, and on a monthly basis prices increased 1.7% between May and June, the fourth consecutive monthly rise.
The steady increase in prices comes as home sales remain steady. Data from HMRC shows UK home sales increased by 1% between April and May and sales in the three months from March to May were 0.5% higher than in the preceding three months, but were 4.2% lower than in the same period last year.
According to Martin Ellis, Halifax housing economist, supply remains very tight with the stock of homes available for sale currently at record low levels. ‘This shortage has been a key factor maintaining house price growth at a robust pace so far in 2015,’ he explained.
‘Economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand with signs of a recent modest pick-up in demand,’ he added.
Jonathan Samuels, chief executive officer of Dragonfly Property Finance, pointed out that there are a lot of mixed signals in the property market at the moment as the latest index from the Nationwide shows prices falling slightly.
He also pointed out that while prices in London have slowed, house prices per square metre have risen by 45% since 2010, highlighting the extent of the growth in the capital in recent years.
‘With economic growth stronger than expected during the first quarter, a buoyant jobs market and people generally better off, you would expect the market to continue to improve throughout the rest of 2015, if at a more moderate rate compared to recent years,’ he said.
There is also a potential effect from the current Euro crisis and how what happens in Greece could affect the UK property market. ‘We could see a flight away from equities into bricks and mortar, but at the same time if Europe as a whole is adversely affected then the UK economy will almost certainly suffer, too,’ he added.
Thomas van Straubenzee of prime London prime property agency VanHan, is expecting to see an influx of enquiries from wealthy Europeans looking to move their assets off the Continent and into London as they seek to avoid the effects of the euro crisis.
‘We have seen interest from the Middle East and India pick up again, which is not surprising as we had noticed that these buyers were particularly affronted by the idea of a mansion tax. We do not see London house prices slowing down anytime soon, as demand continues to outstrip supply, particularly at the top end of the market,’ he added.
According to Jonathan Hopper, managing director of Garrington Property Finders, seller expectations have been outstripping what buyers are willing to pay in several parts of the UK and this overconfidence is finally being checked.
'Despite mortgages being at their cheapest level for years and the supply of homes for sale being tight in many price brackets buyers are still intensely value sensitive. Buyer demand is strong but sensible, and buyers are being much more sober in their offering behaviour than in the last boom,' he said.
'Though confidence among both buyers and sellers remains high, as the summer slowdown begins, sellers must be wary of letting their pricing ambitions run away from what the market will tolerate,' he added.