Transactions slumping despite stronger-than-expected price rises

Government figures suggest house prices are still rising by 5.1 per cent a year, with the average property value in the UK now hitting £226,185. 

House prices across the UK rose 1.1 per cent in July according to the official index. 

In England, the July data shows an annual price increase of 5.4 per cent which takes the average property value to £243,220, while Wales shows an annual price increase of 3.1 per cent which takes the average value to £150,846.

London, where a typical home now costs £488,729, the annual price increase is 2.8 per cent.

In terms of regions with England and Wales, the East Midlands experienced the greatest increase in average property price over the last 12 months with a movement of 7.5 per cent; the North East experienced the greatest monthly price growth in July with an increase of 3.3 per cent.

London saw the lowest annual price growth with an increase of 2.8 per cent and the South East saw the most significant monthly price fall of 0.4 per cent in July..

Sales during May 2017, the most up-to-date Land Registry figures available, show that the number of completed house sales in England fell by 3.3 per cent to 58,209 compared with 60,179 in May 2016.

The number of completed house sales in Wales rose by 9.0 per cent to 3,406 compared with 3,125 in May 2016.

And in London the number of completed house sales in London fell by 6.8 per cent to 6,169 compared with 6,617 in May 2016.

“While the [government] figures are quite historic, they suggest a fairly stable market with the growth rate in property prices unchanged since June. This comes at a time when we might have expected more nervousness among buyers and sellers” says Jeremy Leaf, north London estate agent and a former RICS residential chairman.

“However, it is the shortage of supply, historically low mortgage rates and relatively low unemployment which are underpinning prices, rather than strong buyer demand. The market remains relatively subdued due to a shortage of homes for sale, as well as stretched house prices to earnings ratios and lending restrictions” he adds.

Meanwhile a market snapshot by online agency HouseSimple suggests that the total number of new property listings across the UK fell 13.1 per cent during August compared to July.

New property supply in London was down 22.3 per cent last month claims the agency.

Notwithstanding August’s traditional supply slump because of school and family holidays, the August UK figure this year was still down 5.9 per cent on the corresponding month in 2016.

HouseSimple’s methodology involves the analysis of around 500,000 properties listed on Home.co.uk, and looks specifically at over 100 major UK towns and cities.

Two thirds of towns and cities saw a drop in new properties being marketed in August over July, with Coventry (33.0 per cent) and Winchester (31.1 per cent) experiencing the largest falls. There were also some spectacular rises however - Darlington was up 29.9 per cent and in Cornwall, Falmouth rose 28.6 per cent.

New property supply in London fell 22.3 per cent in August with 30 out of 32 London boroughs seeing a drop off in new listings last month. Richmond saw the biggest fall, (down 42.2 per cent) while only Bexley (up 17.4 per cent) and Sutton (up 8.4 per cent) saw an increase in property supply.

“Few people will be concerned by the drop off in new listings between July and August. More of a concern is the 5.9 per cent drop off when comparing last month with the corresponding month in 2016. Supply continues to be a major issue” according to Alex Gosling, chief executive of HouseSimple. 

“The property market needs a strong September after a subdued period since the General Election. Hopefully a line will have been drawn under the first half of the year, concerns about economic conditions will have dissipated, and buyers and sellers will come back from their summer break with renewed confidence to move forward.”