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The latest on house price growth

04/12/2017

Since the referendum on Brexit, it has been difficult to analyse the effects on the housing market with significant regional variation. Recent surveys have confirmed that house price growth in Britain is weakening with figures from Nationwide Building Society showing a slip in average property prices.

Nationwide consider the annual rate of house price growth has fallen from 4% at the beginning of the year to slow 2.5pc in November. There was a modest 0.6pc increase in growth in the three months to November with average UK property prices having fallen from £211,085 in October to £209,988. 

Demand seems to be weakening due to pressure on household incomes and uncertainties caused by Brexit but low mortgage rates, a severe lack of housing stock, and healthy rates of employment growth are providing support for property demand and propping up house prices. House prices in London have fallen by as much as 4% over the past year due to issues with affordability and this should not come as any surprise with an average house price of £496,000 and house values being over 14 x average salary levels.

 

In the West Country, we have seen the market remain robust with sellers who are willing to be pragmatic on pricing quickly achieving a sale and optimising value. Generally, we have seen values rise by 3 – 4% over the past year across Central and North Somerset. A shortage of suitable property to market is certainly helping to maintain house price growth.

Whilst the Chancellor's decision to abolish stamp duty for first-time buyers purchasing a property up to £300,000 is considered likely to have only a modest impact on overall demand by commentators, in our part of the world where house prices are higher the potential savings are more substantial for buyers. There have been fears that freeing first-time buyers from stamp duty will, in fact, push property prices up further, with the Office for Budget Responsibility claiming the move will increase prices by 0.3pc but, personally, I think the initiative will help mobilise the housing market further and provide more opportunities for first time buyers.

Overall, demand remains robust so it’s premature to talk of the market freezing up. Looking ahead into 2018 it’s likely we’ll see much of the same. Limited supply will nudge up average prices nationwide by 1 – 2%, but with falling real wages eating into what buyers can afford, it’s sellers who are willing to be realistic on asking price who will reap the benefits.

 

Tom Killen

 

 

 

 

 

 

Are you considering selling in the New Year? Contact our professional and experienced teams for a free market appraisal.



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