Average UK property prices up 1.4% quarter on quarter to new high, latest index shows

House prices in the UK increased by 1.4% in the third quarter of 2017, suggesting the official beginning of the Brexit process has not had much of an impact on the property market.

In the three months from July to September prices have seen their fastest growth since February, just before the triggering of Article 50 at the end of March, and the average prices reached a new high.

The data from the latest index report from the Halifax Bank also shows that prices increased by 0.8% in September month on month to an average of £225,109 and are 4% higher year on year.

Indeed, the annual rate of prices growth in September was higher than in August when it was 2.6% and at it is the highest growth rate since February. It is also the second month in a row that the annual rate has picked up.

However, Russell Galley, managing director of the Halifax Community Bank, pointed out that while the quarterly and annual rates of house price growth have improved, they are lower than at the start of the year.

‘UK house prices continue to be supported by an ongoing shortage of properties for sale and solid growth in full-time employment. However, increasing pressure on spending power and continuing affordability concerns may well dampen buyer demand,’ he said.

‘There has been recent speculation on the possibility of a rise in the Bank of England base rate. We do not anticipate this will have a significant effect on transaction volumes,’ he added.

Jonathan Hopper, managing director of Garrington Property Finders, pointed out that momentum remains patchy and growth is wavering rather than sustained while prices remain under intense pressure in several key regions.

His firm has found that many buyers are asking for, and securing, sizeable discounts on asking prices and even buyers with a good chunk of equity behind them are intensely price sensitive.

According to Jonathan Samuels, chief executive officer of property lender Octane Capital, warned that the price growth is driven by weak supply more than consumer confidence and economic strength.

‘Structural supply problems, a shortage of properties for sale and a robust jobs market are keeping the property market afloat. Even if rates are hiked this year or in early 2018, the consensus is that they are unlikely to rise more than 0.25%,’ he said.

‘The stakes are simply too high and the economic backdrop too uncertain for anything more than a nominal rise in interest rates. Since any rate rises will be limited, the impact on transaction volumes may indeed be negligible in the near term,’ he explained.

‘It’s when rates start creeping towards and above 1% that we are likely to see confidence hit. That’s when things start to change and when prices could come under increased pressure. Despite the overall positive numbers from the Halifax, the property market is still in a limbo and will remain there while a number of key political and economic factors play out,’ he added.

‘In 2018, the narrative of a sideways moving market with relatively low transaction levels and buyers in the driving seat is likely to continue,’ he concluded.

Russell Quirk, chief executive officer of eMoov, believes that the housing market has found its feet and is starting to gain momentum again. ‘This momentum is unlikely to regress despite the ongoing spectacle of Britain leaving the European Union,’ he said.

‘In addition, while an increase in interest rates seems very likely over the coming months, they are already at such a low level that any increase is likely to be marginal and insignificant when it comes to impacting or deterring buyers. With the ongoing issue of building supply, UK home owners can be assured the price of their property will remain stable as we head towards 2018,’ he added.

But Lucy Pendleton, director of independent estate agents James Pendleton, is less than convinced and regards the growth an annual trend which sees a backlog of transactions brokered in the summer months complete in September once everyone comes back from holiday.

‘What that often means is that the prices attached to those transactions reflect where the market was much earlier in the year, when prices were higher. On the face of it, this rate of annual growth shoots the market right over the head of inflation with a healthy 1.1% gap and means home owners are no longer living in an investment that is losing money in real terms,’ she said.

‘You would think this data would instil much more confidence among sellers but actually this seasonal distortion is quite misleading and you could see price growth soften just as quickly in the coming months. In London, we are currently seeing many more price reductions at bigger discounts compared with last year,’ she pointed out.

‘It would be easy to get carried away by these figures, but let’s not forgot prices are still being supported by low supply, low mortgage rates and low unemployment, rather than a sudden rise in buyer demand. Saying that, we are definitely starting to see more optimism from buyers and sellers, and confidence in the stability of the housing market,’ she explained.

The firm has found that new sellers in September were up a fifth compared with August. ‘This could be attributed to low numbers of new properties being marketed over the summer. However, we have seen more new sellers last month than any single month in the past two years, which suggests it’s not simply down to the lull in activity over the holiday period,’ she said.

‘Buyers and sellers are still concerned about Brexit, but they are possibly more confident that whatever deal is struck, the fallout won’t be as bad as first predicted,’ she added.

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