The latest UK House Price Index, which is released every month, paints a diverse picture of the UK property market for August 2018. The number of property transactions completed in the UK in June 2018 was 21.5% lower when compared to June 2017. Similarly, the UK Residential Market Survey reveals that The Newly Agreed Sales net balance came in at -10% which represents the most negative reading on this metric for five months. However, after a sharp fall in activity at the end of last year, current sales trends are stabilising in London.
The UK Residential Market Survey explains that in general, the main barrier to activity on the housing market is the lack of supply. This is evident from the fact that the average inventory of unsold stock on estate agents’ books inched back towards historic lows.
The slow-down of the property market is also reflected in the drop in the number of mortgages, as reported by UK Finance. The number of approved mortgages by the main high street banks in September was 9.1% lower than last September; approvals for house purchase were 10.1% lower, and remortgage approvals were 7.4 % lower.
House prices remained quite stable. Average house prices increased by 3.2% in the year until August 2018. East Midlands (6.5%) and Wales (6.2%) saw the most significant increases in house prices. London saw a slight decrease in house prices, property in the capital cost on average 0.2 per cent less than last year, and an average home currently costs £486,304.
Looking at the average monthly price by property type, the largest difference between August 2017 and August 2018 was recorded in semi-detached houses. Semi-detached houses were 4.7% more expensive this year.
Bank of England’s Agents’ summary of business conditions reported that the new-build market remained stronger than the secondary market, though some large housebuilders reported slightly weaker demand and the need for greater use of incentives, especially for higher-priced properties.
Interest from first-time buyers shows a flat trend. As the UK Residential Market Survey explains, this is not surprising after the Bank of England’s decision to increase interest rates in August. However, there is a large regional diversity, since reports show that demand continues to be quite large in Northern Ireland, Yorkshire and Humberside.
In the future, the Royal Institution of Chartered Surveyors’ UK Residential Market Survey suggests that regional divergence will persist, with the market remaining relatively stronger away from the South of England, with market activity in the South West predicted to drop back. Simon Rubinsohn, chief economist at RICS, said: “While a combination of a lack of stock and some level of uncertainty, both relating to the interest rate outlook and Brexit, has had an impact on activity, the overall picture is still encouraging. The story in London and the South East is, as has been widely recognised, rather more challenging but it is important that this is not seen as being indicative of the wider market.”
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