National house price growth slows but market remains active

National house price growth slows but market remains active

According to Strutt & Parker's residential report for Q3 2017, national house price growth has slowed, but continues to show a positive trend.

UK house prices grew 2.3% in the year to Q3 2017, and the national picture has been driven by strong growth outside of London, with the East Midlands, South West and West Midlands all experiencing over 4.5% growth. National house prices are now 13.9% above the 2017 peak.

Guy Robinson, Head of Residential Agency at Strutt & Parker, said: “Despite the slowdown in UK house price growth, the residential market remains active, and Strutt & Parker has recorded an 8.3% annual increase in the number of transactions concluded across the country. Over the past quarter we have seen the impact of political and economic uncertainty on house prices spread from prime central London out to the residential market around the M25, although sensible pricing and other adjustments by all parties can help the market in the commuter belt from becoming stagnant.

The most valuable players in the UK property market this quarter have been in the South West and the Midlands, which are experiencing growth above the national average. These regions benefit from popular cities and market towns with good housing stock and infrastructure, and there is a healthy number of buyers stepping in to take advantage of good schools and affordability.”

London, which has traditionally experienced the strongest growth rates in the UK, has been the worst performing region in 2017, with a negative growth rate of -0.6% (NHPI). Prime central London (PCL) prices have declined for the third consecutive quarter of 2017 with quarterly decrease of 1.0%, following a 1.2% decrease in Q2. This means prices have fallen around 3% so far in 2017 and are down by 5% compared to the same time a year ago. However, it is worth noting that London house prices are still 54.6% above the 2007 peak (NHPI).

Previously it was believed much of the downward pressure on PCL house prices due to Brexit had already been experienced. However, prices in the high value brackets (£2m-£5m and £5m+ brackets) have continued to fall and transaction levels, which at one point appeared to be picking up, have now fallen again. Substantial economic and political uncertainty remains and its does not look likely that will resolve any time soon.

Charlie Willis, Head of London Residential Agency at Strutt & Parker, said: “Prime central London tends to be ahead of the curve in reacting to the political and economic mood, and it experienced a marked slowdown a year and a half ago. Seller expectations are realigning in most situations, with appropriate asking price adjustments. As we head into 2018, we envisage seeing a more active market with an increase in the number of buyers and sellers alike.


Affordability and value are still important even when the buyer profile in prime central London often consists of cash rich buyers. It is a misconception that cash buyers in prime central London are shielded against changes in interest rates and the wider economy. Many cash buyers still need some form of finance, usually having significant other investments, and will be looking to lenders to finance refurbishment and other improvement works by taking loans out against their property investments.”

Strutt & Parker, alongside its economic forecasters Volterra, is forecasting 0.0% growth in PCL in 2018 as a best case scenario (with downside risk at -5.0%) and 2.5% growth for 2018 across the UK.

Vanessa Hale from the Research division at Strutt & Parker, said: “In the face of far from optimum conditions, it is forecast that the UK economy will grow by 1.6% over the whole of 2017, while forecasts for 2018 and 2019 have been downgraded to 1.2% and 1.4% respectively. While political and economic conditions remain uncertain, we have seen slower than expected house price growth. With the current Brexit negotiations underway, we continue to maintain that from 2019 onwards it is extremely difficult to forecast the housing market with any certainly, but we would expect some bounce back and a return to growth once more political stability has returned.”

Interest rates rise

On 1 November the Bank of England finally increased the official bank rate – from 0.25% to 0.5% – the first interest rate rise in over ten years. The rate remains very low by historic standards, but it will increase mortgage rates for some households, as well as increasing savings rates for others. Financial markets are indicating two more interest rate increases over the next 3 years, taking the official rate to 1%.

Stephanie McMahon, Head of Research at Strutt & Parker, said: “Although expected by many this rise in interest rates will have an impact on mortgages. As a reversal on the August 2016 cut it could be argued that the shift may not be significant, it will be compounded however, by a further year of limited wage growth combined with inflation. As a consequence, greater pressure is being put on household discretionary income.”

Join our mailing list:

Leave a comment



Latest Comments

Scott Garnet
Scott Garnet 06 Nov 2017

If you have a patio or a porch it is important to make sure that any connecting doors are secured. Good advice for sliding glass doors is replacing the panels with storm resistant glass and getting heavier...

view article
richardrawlings
richardrawlings 01 Nov 2017

What has not been mentioned here is the effect of not only higher interest payments, but also that these payments are less likely to be offsettable as a business cost due to the scaling back of mortgage...

view article
Kelvin Lloyd
Kelvin Lloyd 09 Oct 2017

IT is up, to the Planners. If they will only give permission for bungalows on certain (suitable) sites, they will be built.

view article
maggie swift
maggie swift 09 Oct 2017

It's just the beginning of the shocking rise.

view article
maggie swift
maggie swift 09 Oct 2017

I have recently read that the bungalows can provide social housing for elderly residents in London.

view article
zoe glover
zoe glover 05 Oct 2017

Update! Worst company I have ever dealt with. Undervalued a Cambridge property by over 100k, wont take on any evidence of valuation including a RICS valuation done 3 years ago for the very same value...

view article
Paul Edwards
Paul Edwards 27 Sep 2017

Its nonsense articles such as this that make it harder to get clients to realise just how difficult the market is out there. When you see Rightmove and there are more 'price reduced' then 'new' most days...

view article
Tom Allen
Tom Allen 20 Sep 2017

Absolutely agree with you!

view article
RyanGeo
RyanGeo 18 Sep 2017

A sharp correction would be a less dramatic expression to use. That is already underway in certain sectors in Reading where I practice as Chartered Surveyor

view article
sean benton
sean benton 01 Sep 2017

Identity theft is a thread for any profession. So,people should stay alarmed. I once take help from a letting agent and came to know that letting agents are taking every precaution to prevent fraudulent...

view article
Mark N.
Mark N. 30 Aug 2017

We have seen a surge in instructions over August and that should continue into September too.

view article
Chris
Chris 30 Aug 2017

Unfortunately, all the legislation bears its force on Landlords and ignores, naively, the effect of Rogue Tenants on the ability of landlords to keep houses in repair and offer properties for rent at reasonable...

view article

Related stories

More articles from Property