UK house price analysis confirms slowdown in growth
07-15-2017
ouse prices in the UK were up 2.4% year on year in the second quarter of 2017, confirming a slowdown from the first quarter figure of 3.6% the latest analysis of index data shows.
And the slowdown was even more marked in London with growth of just 0.8% in the second quarter compared to 13.7% at the same time in 2016 while Scotland recorded the sharpest regional decline in property prices, down 4.2% year on year.
The Halifax house price index, administered by IHS Markit, shows a sustained slowdown in UK property price inflation from the peak seen in early 2016 with the annual the slowest since the start of 2013.
In London house price momentum remains among the weakest recorded for five years while the East Midlands was the strongest performing English region, up 9.7% year on year in the second quarter of 2017, followed by East Anglia up 8.2%.
The standardised UK house price was £222,911, a rise of £5,320 over the past 12 months and it is up £64,552 from its post-crisis low in the first quarter of 2009. On a longer term horizon, the latest figure is up £22,288 or 11.1% since the second quarter of 2007.
The standard house price in London in the second quarter of 2017 was £452,758, around double the UK wide figures, with the next highest in the South East at £341,950, the South West at £246,585 and East Anglia at £241,853, all exceeding the national average. The lowest prices were in Northern Ireland at £131,392, followed closely by Scotland at £133,428.
The second quarter data marks almost a decade since the previous peak in UK house prices during the summer of 2007, when the standard price reached £200,623. Regional house price trends have diverged considerably in the past 10 years, the index report also shows.
By far the largest increase in house prices since the second quarter of 2007 has been recorded in London with growth of 42.8%, with sizeable spill over to commuter areas. As a result, the next largest rises in standard house prices have been in the South East, up 30% and East Anglia up 24.3%.
At the bottom, the standard house price in Northern Ireland is down 42.2% from its pre-financial crisis peak. Three other regions have also recorded a drop in the standard house price compared with a decade ago with the North of England down 9.7%, Scotland down 6.2% and Wales down 0.6%.
‘A loss of price momentum in London continues to weigh on headline measures of UK house price inflation. There are now signs that weakness in the capital has started to extend to commuter areas beyond the M25, with property prices across the wider South East increasing at the slowest annual price since the end of 2012,’ said Tim Moore, Senior Economist at IHS Markit.
‘London’s soft patch has clearly magnified the slowdown in UK house price inflation since 2016, but this weaker trend is not exclusive to the capital. A generally cooling UK housing market appears to have emerged so far in 2017, driven by affordability constraints, pressures on household finances, greater caution among buyers and the fiscal squeeze on buy to let,’ he pointed out.
‘As we move through the summer of 2017, it marks exactly a decade since the standard UK house hit its pre-financial crisis peak, briefly rising above £200,000. Against the high watermark seen in the summer of 2007, sizeable parts of the UK have experienced a lost decade for house price gains. This includes lower standardised property prices in Northern Ireland, Scotland, the North of England and Wales compared with 10 years’ ago,’ he explained.
‘Despite signs of weakness in 2017, by far the greatest rises in standard house prices since the onset of the global financial crisis have been in London, up 43%. In cash terms, the gap between standard house prices in London compared to the UK as a whole has almost doubled in 10 years to £230,000 compared to £119,000 in 2007,’ he added.