Kate's property price update - future growth assured?
Price growth nationally has been better than expected for many, with both Rightmove and LSL Acadata HPI reporting “a new milestone” of average prices topping £300,000 for the first time.
However, it’s important to note that these are marketing prices; average sold prices from the UK HPI stand at a more modest £234,278.
In addition, the average annual growth of 3-5% is a lot lower than previous increases so, while future growth is assured, it looks like the market will be steadier and more in line with wage growth than in the past. This will be a welcome relief for many, after the roller coaster rises and falls of the last 10 years.
Source: UK HPI
Regionally, price changes continue to defy previous trends which used to follow a ‘ripple effect’ with London increasing, then the home counties, then expanding to the Midlands and North. Currently though, price growth is concentrated more on the cities, with the likes of Reading, Manchester, Leicester, Norwich and Bristol all performing well. According to Hometrack, “Bristol was the fastest growing city in 2016.”
This seems to be reflecting the increase in demand for homes in cities, rather than smaller towns and more rural areas, increasing demand where there is typically a shortage of supply.
Looking to buy for the first time in 2017? Read our FTB quick guide.
London seems to be the one area of uncertainty; we are not sure how it will perform moving forward. The huge increases since the credit crunch now seem to have abated and, as Hometrack point out, affordability is beginning to bite and may well hold back the capital from its previous high year on year growth figures.
For more, see our comprehensive regional and city data.
With both supply and demand doing well, the estate agents I have spoken to are more optimistic about 2017, and LSL Acadata HPI report: “Our predictions for January 2017, although lower than December, are indicative of a strengthening market, with sales higher than normally expected for the time of year.”
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But be prepared for some gloomy headlines when unfair comparisons are made with the first quarter of 2016. A year ago, investors rushed to beat the stamp duty increase for second home owners, causing a spike in both price and sales.
How the media chooses to report the inevitable drop could dampen people’s buying and selling spirits, so it’s best to get sales pushed through sooner rather than later, before any jitters set in.
For more on property prices, download my comprehensive update.