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UK house prices stall amid affordability issues

Annual house price growth continues to slow, as affordability issues deter many prospective homebuyers.

With 2017 proving to be a rather challenging time for many British households, with inflation recently increasing to its highest level since September 2013, while real wages are falling, many consumers are currently facing a spending squeeze and that is having an adverse impact on their ability to buy property.

Data from the Office for National Statistics (ONS) yesterday revealed that the average price of a residential property in the UK dropped by 0.6% between February and March, as a consequence of weaker demand from purchasers, adding to the general slowdown in the annual growth rate seen since mid-2016.

The ONS’ house price index revealed that the average UK house price increased by 4.1% in the 12 months to March 2017, down from 5.6% in the year to February 2017, to hit £215,848. 

The UK HPI for March 2017:

England by region

Monthly change % since February 2017

Annual change % since March 2016

Average price March 2017

East Midlands

-0.2

6.7

£176,213

East of England

-0.8

6.7

£277,127

London

-1.5

1.5

£471,742

North East

-1.3

-0.4

£122,298

North West

-0.6

6.2

£150,250

South East

-0.5

3.8

£311,514

South West

-0.7

2.8

£240,222

West Midlands

0.3

6.5

£180,293

Yorkshire and The Humber

-0.6

4.0

£149,606

Reflecting on the latest data, Nick Leeming, Jackson-Stops & Staff chairman, said: “Annual house price growth may be slowing, but March’s figures are by no means a washout in this regard, with prices up on March 2016 in every region apart from the North East, with the Eastern regions storming ahead with 6.7% growth apiece.

“Low mortgage rates and lack of supply continue to underpin UK house price growth but many buyers, especially first-timers in London and the south, continue to feel the strain of making their stagnating salaries stretch to match the continually increasing cost of housing.”

Leeming believes that “radical action” is needed to tackle the continuing housing crisis, with ownership spiralling out of reach for many.

He continued: “It’s heartening to see that cross-party consensus has emerged ahead of the general election on the need to urgently tackle the issues, with promises to get councils building again and to help more people onto the housing ladder. The general election itself may cause a blip in growth, but given the short timeline, this should be limited.

“However I still believe one of the biggest issues overshadowing aspiring and current homeowners at all levels, but especially first-time buyers, is prohibitive stamp duty land tax.

“On top of a deposit, legal fees, costs of surveys and moving, this is a hugely significant cost especially when people are also paying rents at the same time.”

Many people may believe that yesterday’s data shows a housing market suffering from the effects of uncertainty, but Matt Robinson, CEO of Nested, believes that the “stable levels of growth are far more conducive to activity”.

He commented: “While price growth in the UK housing market has come off the boil somewhat, we continue to see a strong and stable increase in house prices across the country despite the lead up to Brexit and the upcoming general election. The election may result in a momentary market pause, but we expect it to be business as usual thereafter.”

The recent easing of house price growth will continue to be welcome news to prospective homebuyers, according to Andy Sommerville, director at Search Acumen, but he insisted that the UK government cannot rely on a “sluggish market” to bring this relief.

Sommerville commented: “It is encouraging to see that the issue of housing has come to the fore in this year’s election campaign with the Conservatives promising a ‘new generation’ of social housing and Labour pledging to build one million new homes.

“Policies directly tackling the critical issue of housing supply will offer sustainable solutions to further reduce house prices, making the dream of home ownership more attainable for many in the UK. But the question remains, can any party deliver such unprecedented increases in housebuilding?”

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