UK House Price Growth Rises to new 2017 Peak in July

Property values increased despite seeing a fourth successive quarterly fall.

The average value of a property in the UK rose by 0.4% last month – the largest monthly increase to date in 2017.

With the average home now worth according to the house price index published by mortgage lender Halifax, the increase partially offsets the 0.9% decline in house prices seen in June, where the average price fell to

However, while property prices rose on a monthly basis, July also marked the fourth successive month of quarterly decline in house price values for the first time since November 2012.

Property values in the past three months (May to July) fell by 0.2% on the values seen between February and April, maintaining the pace of quarterly decline seen in the market since April this year, where prices fell by 0.2% over the quarter.

Annually, house price growth continues to slow, with the year-on-year increase in July standing at just 2.1% – down from the 8.4% seen in the same month last year and falling half a percentage point from the 2.6% seen in June 2017.

Commenting on the market’s movement in July, Russell Galley, Managing Director of Halifax Community Bank, said:

‘House prices continue to remain broadly flat, as they have since the start of the year. Prices in the three months to July were marginally lower than in the preceding three months, while the annual rate of growth has edged down from 5.7% in January to 2.1% in July; the lowest rate since April 2013.

‘However, a continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should continue to support house prices over the coming months.’

Elsewhere in the market, housing supply continued to struggle, said Halifax, as new home instructions fell for the 16th consecutive month and average stock levels experienced another slight decline to push them to a new record low.

Housing Stock Hits 40-Year Low

The UK’s housing shortage is being exacerbated by an absence of houses being listed on the UK property market, according to the latest index from the Royal Institution of Chartered Surveyors (RICS).

 

Average stock levels for estate agents fell to just 42.53 houses per branch in June – the lowest level recorded since January 1978.

 

Down from the 43.1 seen in May and less than half of the peak 90.95 seen in May 2008, those surveyed emphasised that the current political climate in the UK, and the country’s relationship with Europe, remain at the forefront of sellers’ minds.

 

Despite causing an initial downturn in stock availability last year, the effect of Brexit has started to subside according to RICS’ data, with 27% of those surveyed indicating that the two-year negotiation period was the main issue for sellers.

 

However, the UK’s parliamentary wrangle following last month’s General Election was seen as a leading factor in the falling number of houses available, with 44% of respondents stating that this was the main reason for homeowners electing not to sell at this time.

 

RICS’ chief economist, Simon Rubinsohn, emphasised that the UK’s ongoing political uncertainty was going to continue to have an influence over both stock and transaction levels as the market moves forward.

 

‘Transaction levels … are flat-lining,’ said Rubinsohn. ‘[They] may continue to do so for a while, particularly given the ongoing challenge presented by the low level of stock on the market.’

 

The UK’s continuing shortage of stock is helping lower priced areas of the country with house price growth, said Rics, with a new geographical divide in rising property values now emerging.

 

Whilst the South has traditionally led the UK’s increases, the market is currently seeing the South begin to plateau, as the North continues to rise.

 

‘The latest results demonstrate the danger, however tempting, of talking about a single housing market across the country. RICS indicators, particularly regarding the price trend, are pointing towards an increasingly divergent picture,’ said Rubinsohn.

UK Property Favoured by Investors Amid Political Uncertainty

Traditional asset classes, such as UK real estate, continue to be seen as ‘safe havens’ for investment.

 

Commissioned by peer-to-peer group Kuflink, a survey of over 1,100 investors across the UK shows that more than a third of respondents, or 34%, believed Brexit to have had an impact on their investment strategies.

Britain’s decision to exit the European Union appears to have particularly impacted millennials, or those aged between 18 and 34, and London-based buyers, with this figure increasing to 61% and 71% respectively.

The survey, which assessed investor sentiment towards property and alternative finance in the current political and economic landscape, also revealed that 30% of investors are favouring the property market due to its perceived strength – the equivalent of nearly 9 million people.

However, figures indicate that the majority of investors have also adopted a degree of caution, as 38% of respondents cited to be waiting until after the results of the UK’s snap General Election on June 8 to take new investment opportunities.

Commenting on the results, Kuflink’s CEO, Tarlochan Garcha said:

“The EU referendum has set in motion a number of political and economic shifts that are inevitably impacting the way the UK’s investors think and act. Today research has underlined the faith people place in property as an investment vehicle.

“With a huge number of investors gravitating towards this safe haven asset amidst the uncertainty caused by Brexit and the approaching General Election. There is undeniable investment value in retrospective data and historical evidence to support the strength of any investment class.

“For this reason, I have great faith in the resilience and strength of the UK property market and take confidence in the fact that UK investors agree.

Earlier this week, newly released data by Rightmove showed that asking prices in May saw a significant monthly increase, due to rising demand.

Substantial Rental Growth Found Outside of the Capital

UK renters are increasingly looking outside of London, as the capital’s rental market reaches an affordability ceiling.

Your Move’s latest buy-to-let index shows rents across England & Wales averaged in February.

In London, however, the exodus of renters looking outside of the capital for more affordable accommodation has resulted in slower rental growth, with rents declining 1% year-on-year and 0.5% from the previous month to an average of in February.

Similarly, the rental market in the South West also saw pressure ease in February, as rental properties reached a surplus in the region; rents in the area reduced by 1.5% year-on-year, with the average price now standing at pcm.

Tenants in Wales, on the other hand, saw rents surge the quickest over the month, with the average property letting for in February – a 7.7% annual increase.

A monthly reduction saw rental returns slide by 0.1% from January to an average of 4.1% across England and Wales.

The highest rental returns were found in the northern regions of the North East & North West, where average returns stood at 5.3% & 5% respectively, in February.

Conversely, landlords with properties in the South East and South West saw rental return fall below 4% in February, following a year-on-year decline.

The news follows Knight Frank and IHS Markit’s latest publication, which found that property owners continued to remain positive about the UK property market in March.

International Buyers to Drive Commercial Property Investment in 2017

Investors from overseas are expected to be the dominant force in the UK commercial property market this year, says a new survey.

Investors from overseas are expected to be the dominant force in the UK commercial property market this year, says a new survey.

The decline in the value of sterling, following the UK’s decision to leave the European Union last June, and the strength of the dollar have been key factors in seeing rising demand in recent months, according to the survey from the Royal Institution of Chartered Surveyors (RICS).

With confirmation from the Prime Minister that the UK will also be leaving the European single market, the wave of interest seen from overseas investors in the final quarter of 2016 is expected to continue.

Whilst the majority of the UK has seen demand increase, London’s commercial market has seen growth slow, said respondents, as the market anticipates the potential departure of firms from the city following Brexit.

The survey revealed that 18% of respondents believe that there are companies in their region considering relocation, dependent on the nature of the UK’s post-Brexit deal.

Despite the prevalent concerns, the survey also indicated that demand from international investors is expected to remain high, with 28% of respondents stating that they anticipate an increase in property values over the next year – driven by overseas buyers.

Earlier this week, consultancy group Arcadis announced that enquiries from China increased by a third in Q4 2016, as far eastern investors look to capitalise on weak sterling, with interest set to continue this year.

Commenting on the results of the survey, RICS chief economist, Simon Rubinsohn, said:

‘… the commercial property market is continuing to attract investor interest despite ongoing concerns about pricing in the capital and the prospects for the economy more generally. Indeed, the feedback RICS has received is consistent with a renewed appetite from overseas buyers for UK assets.’

Last week, Deloitte revealed that construction companies are increasingly focusing on the UK’s regional cities, in order to meet demand from investors exploring their options outside of the capital.