May’s summary of house prices – are price rises cooling?

publication date: May 12, 2014
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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May's summary of house prices - are price rises cooling?

Average house price headlines

As property market prices gain momentum, calls for ‘restraining’ the property market are now regularly appearing in the media. However, this isn’t easy to do when a large part of the sales are cash sales, and panic buying for fear of never being able to afford to get on the ladder, is gripping London so hard. Increased supply of land and housing is now essential for London in particular, and the new build targets of just over 40,000 per year for London are far too low to make London affordable to live and to keep local communities operating.

Rightmove - “London ripple pushes all southern regions to new price records.” - “Home prices rising faster than ever.”

NAEA - “Buyers willing to pay more as supply constricts once again.”

Hometrack - “Emerging signs of price resistance in London Market.”

RICS - “Demand supply imbalance continues to push prices higher.”

Nationwide - “Annual house price growth now into double digits.”

Halifax - “House prices in the three months to April were 2.3% higher than in the three months to January.”

Acadata “Average house prices climb £1,200 in April - setting new record.”

Land Registry - “The March data shows a monthly price change of -0.4 per cent.”


Regional price variations
Looking at the Land Registry figures post the crash in the 1990s, the highest rises recorded for London were in 2000 when they reached 30-35% year on year growth. Interestingly, it took three years before we saw similar rises of 20-30% in other regions. What will be interesting is to see how long and if, other regions achieve similar growth to London in the coming years. What’s also important, are any housing policies for the future, and to some extent ‘average prices’ should quote and consider London separately to the rest of the UK.

Download the full property price summary here

Demand for property
With demand rising from two key areas: first time buyers and buy to let landlords, the problem is neither of these help to increase supply to the market, bar new builds being bought. From a demand perspective, housing policies for the next election need to prioritise how housing supply is going to be brought forward, now, not in a few years’ time. Housing affects the economy, cost of living and people’s wealth and well-being. Whoever is next in government needs to, as a matter of urgency, look at policies to encourage investors to ‘build to let’, continue with schemes to encourage ‘first time buyers’ to buy new builds, and find a way to release land and drive private funding into housing associations and councils to deliver social and affordable housing, which is the main supply problem in the UK.

Download the full property price summary here

Supply of property
The Rightmove stats are particularly interesting as they should give a ‘future view’ on what’s happening supply wise. I’ve certainly noticed an uplift in the number of properties available, as I’m currently looking at buying again and whereas one or two properties might arrive in the inbox in January, it’s more like five a week now. What we really need is people trading up and down to drive supply in the short term, but it’s only new build that will impact on property price growth in the future, and this can only happen with better housing policies and more land released, while making sure the quality of properties is maintained from a space and design perspective.

Download the full property price summary here

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