7th April 2016
Annual house price growth in the UK had edged above 10% in March with the market also seeing price growth on a monthly and quarterly basis, the latest index shows.
Property prices increased 10.1% year on year, taking the average price of a home to £214,811, the data from the Halifax index shows. It also records month on month growth of 2.6% compared with February and quarterly growth of 2.9% in the first three months of 2016. But the quarterly rate of change was just below the 3% recorded in February.
The annual rate of growth was higher than the 9.7% rise recorded in both January and February and has been within the 8% to 10% range for nearly the whole period since the start of 2015.
The monthly increase in March more than offset February’s 1.5% fall but the index report points out that the quarter on quarter change is a more reliable indicator of the underlying trend as monthly house price changes can be volatile.
Flat prices have risen more sharply than prices for other property types since 2008, according to recent separate Halifax research. The 57% increase in the average price of a flat is significantly higher than the 37% rise for all residential properties over the period. Detached homes recorded the smallest rise at 20%. Terraced and semi-detached houses saw price rises of 38% and 34% respectively.
A considerable proportion of the national rise in flat values has been due to the rapid increase in flat prices in London with growth of 62%. However, flats represent a much higher share of the property market here than elsewhere. Half of sales in London are flats compared with the UK average of 17%.
Worsening sentiment regarding the prospects for the UK economy and uncertainty ahead of the European referendum in June could result in some softening in the housing market over the next couple of months, according to Martin Ellis, Halifax housing economist.
‘Current market conditions, however, remain very tight with an acute supply/demand imbalance continuing despite an improvement in the number of properties coming on to the market for sale in recent months. This, together with continuing low interest rates and a healthy labour market, indicate that house price growth is set to remain robust,’ he said.
Russell Quirk, chief executive of eMoov, pointed out that much of the increase in March could be due to buy to let landlords rushing to beat the introduction of an extra stamp duty tax on additional homes at the beginning of April.
‘Although it looks like good news for UK homeowners on the surface, this increase could be artificially inflated due to the stamp duty changes. When coupled with the fact that interest rates are still at a rock bottom and keeping the market buoyant, it’s hard to tell exactly how the market will go,’ he said.
‘It will be interesting to see what happens next month once the stamp duty dust has settled and I wouldn’t be surprised if the UK property rollercoaster shows another slight drop,’ he added.
According to Alex Gosling, chief executive officer of online estate agents HouseSimple, the April figures when they are published will give a better idea of what is happening in the housing market due to an expected upward blip caused by the buy to let rush.
‘This is traditionally a buoyant time for the housing market, and we would expect to see buyer and seller activity ramp up. However, with the referendum just a couple of months away, and fewer buy to let investors likely to purchase in April, we might actually start to see prices cooling. That wouldn’t be an altogether bad thing for the market,’ he added.
Christian Faes, chief executive officer of short term property finance lender LendInvest, believes that making buy to let less attractive to the amateur landlord won’t suddenly push house prices towards more affordable levels for aspiring first time buyers.
He explained that unless more is done to help first time buyers actually finance the new homes that are being built not a lot will change. ‘Estate agents have never had so few houses on their books, according to the Royal Institution of Chartered Surveyors. So while the stamp duty rush is over, house price rises certainly are not,’ he added.
No one should confuse the return of double digit annual price growth with universal health in the property market, according to Nicholas Finn, executive director of the buying agents Garrington Property Finders.
‘There’s every chance that these strong March figures represent the last hurrah of Britain’s army of buy to let landlords. Yet demand from first time buyers remains strong, and the supply of property for sale is hovering close to record lows. With demand still far outstripping supply in most areas and no imminent prospect of an interest rate rise, price inflation is likely to remain robust over the coming months,’ he pointed out.
‘However as June approaches, the uncertainty created by a potential EU exit is likely to have a chilling effect on the frothiest parts of the market. It’s more than a year since the Halifax last recorded annual price growth in double digits, and we shouldn’t expect it to stay this high for long,’ he added.