In recent months the tables have turned on the south east, it seems that house prices are slowly declining in the south while many more regions of the north west are showing healthy prices rises. Richard Donnell, from Hometrack Insight team, states: “Buyers outside the south appear to be shrugging off concerns over Brexit and a squeeze on real incomes to take advantage of low mortgage rates.” The Land Registry reveals a monthly decline of 1.5% in London sold prices, prices in the capital have risen just 3.5% in 12 months; while just a year ago this figure was 14.4%!
Meanwhile, in Manchester we are topping the growth chart at 8.4% annual price increases.; followed by Birmingham and Leicester at 7.7%. For the nation has a whole we see a monthly fall of 0.2% and last month 0.4%. For the year to date the national price rise of 2.1% is the weakest in four years!
There is some worry and much speculation about the causes of this strange market place. The main cause is likely to be general uncertainty, due to ongoing Brexit negotiations and of course following the latest snap election. Halifax housing economist, Martin Ellis stated: “Housing demand appears to have been curbed in recent months due to the deterioration in affordability, due to a sustained period of rapid house price growth.” He continues, “signs of decline in the pace of job creation, and the beginnings of a squeeze on household finances as a result of increasing inflation, may also be constraining the demand for homes.”
From what I can see, it appears that prices rises are simply adjusting naturally, the rates of growth in prices we have seen in recent years across the country cannot be sustained in the long run. Due to the housing shortage I think we will see slow steady growth in coming years, or stabilization in some areas, I think panic is perhaps unjustified at this stage. With record low interest rates still available and supply at an all-time low, prices are highly unlikely to plummet as some are suggesting. As interest rates being to increase we will see the growth flatten.
Demand will remain strong in coming years, figures from Shelter show that the UK needs 250,000 new homes per year to keep pace with demand; Government statistics show there are only 172,740 houses being built this year.