UK HPI: House prices 'remain indestructible'
The latest UK House Price Index from the ONS and Land Registry has revealed that, across the UK, the average price of a home has have increased by 6.2% in the year to January 2017, up from 5.7% in the year to December 2016.
The average UK house price was £218,000 in January 2017. This is £13,000 higher than in January 2016 and £1,000 higher than last month.
However, the January figure remains below the average annual house price growth seen in 2016 of 7.4%.
The main contribution to the increase in UK house prices came from England, where house prices increased by 6.5% over the year to January 2017, with the average price in England now £235,000. Wales saw house prices increase by 4.2% over the last 12 months to stand at £146,000. In Scotland, the average price increased by 4.0% over the year to stand at £142,000. The average price in Northern Ireland currently stands at £125,000, an increase of 5.7% over the last 12 months.
The East of England is the region which showed the highest annual growth, with prices increasing by 9.4% in the year to January 2017. Growth in the South East was second highest at 8.7%, followed by London at 7.3%. The lowest annual growth was in the North East, where prices increased by 2.2% over the year.
Paul Smith, CEO of haart estate agents, comments: “With only a week to go until Article 50 is triggered – house prices remain indestructible as the average person is paying £13,000 more to own a home than the same time last year, reflecting the health and buoyancy of the UK economy seen in the last few months. This certainly chimes with our own data.
However low supply does have a big role to play in rising prices. If the Government could finally stick to their word and take action to substantially boost house building across the UK to meet the needs of families, downsizers and first-time buyers, we could certainly see the UK property market going from strength to strength in the upcoming months. While the Government is focused on the EU we must not lose sight of the challenges here at home.”
Russell Quirk,eMoov CEO, said: “Although mortgage based indices like Halifax and Nationwide offer an indication on how the market is behaving, this first set of 2017 data from the Government provides a concrete look on how the market has emerged from an up and down 2016.
Despite the seasonal lull towards the end of the year, prices have continued their upward trend and the market looks strong heading into 2017. This continued growth does hinge on next Wednesday’s triggering of Article 50 however. Although many predict an apocalyptic end to the world, there is also a chance it will further stabilise the market as the current period of Brexit limbo experienced since last June will finally come to a close.
In many cases, the uncertainty of an outcome can be far more detrimental than the outcome itself and it is clear that many buyers and sellers have been holding tight on a sale until a decision is made. Despite this, it is actually the markets like the South East and London in particular where the most detrimental impacts of Brexit have been forecast that have continued to see the strongest price growth."
Mark Harris, chief executive of mortgage broker SPF Private Clients, says: "The increase in inflation to the highest level since 2012 is a concern for squeezed families worried about the rising cost of living. It also presents a problem for the rate setters as it has exceeded the Bank of England’s 2 per cent target. However, while the Monetary Policy Committee will have to keep a close eye on inflation, it seems unlikely that there will be any compelling evidence to persuade the majority of members to vote for a rate rise anytime soon. As long as there is uncertainty about the Brexit process, we don’t expect to see a rate rise until we are out the other side, which will take a couple of years at least.
As far as mortgage pricing is concerned, while Swap rates have risen in recent days, the cheapest two-year fix has once again slipped below 1 per cent with Yorkshire Building Society launching a deal pegged at 0.99 per cent. This suggests we haven’t seen the back of the cheapest fixed rates and that there is more to setting mortgage rates than Swap rate movements. With much competition among lenders to lend, some will be prepared to absorb higher borrowing costs rather than pass them onto customers."
Jeremy Leaf, former RICS residential chairman, had this to say: "Although some of these figures are historic, particularly the UK HPI transaction numbers, they do indicate a worrying trend of fewer transactions but prices still rising underpinned by shortages of stock. At the coalface we see these numbers, as well as concerns about rising inflation, translating into more caution, longer transaction times and hard bargaining but an improving confidence about getting deals done."
Jeremy Duncombe, Director, Legal & General Mortgage Club, commented: “As house prices begin 2017 on an upwards curve, our country’s housing problem continues to worsen. Despite record low interest rates, the latest ONS figures show that average house prices in England & Wales have now reached 7.6 times more than average earnings. This gap is only going to widen if prices continue to follow this trend, preventing many from taking their first steps onto the property ladder."