National Trends
UK house prices have risen 10.5% annually, the steepest rate on record and are up 1.9% on the month to reach an average of £224,242. This is the highest average price since April 2012 and a continuation of the strong positive growth in prices we have seen over the last year.
These steadily rising prices are being driven up as a result of the growing divergence between supply and demand. While the number of new buyer registrations has increased 6.4% in the last year, the supply of new properties has fallen by 10.1% over the same time period. This has resulted in 12 buyers chasing every new instruction coming onto the market.
While buyer viewings are down 4.3% on the month in October, sales have declined just 0.3% indicating that people are seeing fewer properties before buying.
First-time buyer house prices have risen 1.0% annually but have declined 0.6% on the month to sit at £166,568. As demonstrated by Graph 1, the first-time buyer market is much flatter at the moment with far less growth than the rest of the market. The average cost of a first-time mortgage has fallen 0.7% in the last month to reach £132,637, however in the last year it has risen 1.2%.
The number of new first-time buyers is up 5.2% on last October, however there has been a 5.5% decline in registrations in just the last month. First-time buyers made up 42.5% of all mortgages written in September, up from 42.0% a year ago.
The average property price in London has risen 4.2% annually,less than half the rate of growth seen in the UK as a whole over the same time period. In the last month they have increased 1.5% to reach an average of £510,925. New buyer registrations have soared 11.7% on the year but have declined 3.6% on the month.
Meanwhile the number of new properties for sale has shrunk by 1.2% on the month and 13% since last October. The result of this is that there are now nearly 22 buyers competing for each new home to come onto the market, up 28.4% on the year.
Paul Smith, CEO of haart, comments: “UK house prices in October rose faster on a monthly and annual basis than they have since our records began, up 1.9% and 10.5% respectively. The surge has resulted in the average property price peaking at £224,242. This trend is the outcome of diminished stock levels which are currently at their lowest since February, meaning there are now 12 buyers chasing every property to come to market.
The Government must take drastic action to encourage the release of homes suitable for families and prevent record high price rises in 2016 for the core of the UK property market. The new Help to Buy ISA available from next week should help first-time buyers save for their deposit but it is stimulating demand without addressing the underlying issue of lack of supply.
While house prices in the rest of the UK are likely to continue their current trajectory in 2016, the top end of the market, particularly in London, will see a price correction because of the impact of stamp duty - likely to consist of a 10% drop in value for homes currently priced over £1 million. Our data is already beginning to show London falling behind the rest of the UK in terms of growth in house prices as a result of this.”
