UK residential property prices still inching up, latest index shows

UK property market stable with signs of life

The UK residential real estate market is widely stable with all but one region seeing prices increases in the second quarter of the year, the latest property index shows.

Average prices inched up 0.1% in June on a seasonally adjusted basis following a 0.5% increase in May, the figures from the Nationwide show.

The smoother quarter on quarter rate of change rose marginally from 1.7% to 1.8%. By contrast, the annual rate of house price inflation dropped for the second consecutive month from 9.8% to 8.7%, reflective of the fact that house prices were increasing at a faster pace this time last year, it also shows.

The South West of the country shows strongest regional growth over the quarter while London has the strongest growth overall. Only Northern Ireland saw prices fall over the same period.

The South West of England saw prices up by a seasonally adjusted 3%, and up 12.5% annually. Greater London continued to be the best performing region on an annul basis with prices up 13.2% on the second quarter of 2009.

Northern and midland regions generally saw weaker growth than the southern regions. The East Midlands saw the weakest growth out of the English regions, with quarterly price growth of 1.2%.

The North remained the weakest region on an annual basis, with prices up 6% year-on-year. The Outer Metropolitan region retained second place behind London, with annual growth of 12.9%, following a 2.3% increase over the quarter.

The index also shows that annual house price growth in Scotland picked up from 5.6% in the first quarter to 7.2%, but remained below the UK average. Quarterly price growth in Wales was similar to the rest of the UK, with a 1.8% rise in the quarter. However, on an annual basis, Wales was the second weakest region with prices up only 4.7% year-on-year.

Northern Ireland experienced a weak quarter, with the quarterly rate of change falling from -1% to -5.7%. On an annual basis, house prices were down 5.2%, a slight deterioration from the 3% year-on-year fall in the first quarter. Northern Ireland remained the worst performing UK region.

‘The latest data from Nationwide shows house prices edged up by just 0.1% in June, the smallest monthly gain since February 2010. The flatter trend in prices which now appears to be emerging is consistent with evidence that fresh supply onto the market is beginning to outstrip new buyer enquiries,’ said Simon Rubinsohn, Royal Institution of Chartered Surveyors  chief economist.

‘Indeed, the decision to abolish HIPs is likely to encourage an increase in new instructions to estate agents if the results of the latest RICS survey are anything to go by. It indicates that the supply of property onto the market is expected to rise by around 15%,’ he explained.

‘The more important issue for the market is whether this is accompanied by a pick up in transaction activity. The increase in choice for purchasers as more property comes to the market is a healthy development which, in conjunction with the stamp duty holiday for first-time buyers, could see sales volumes increase a little from current disappointing levels. However, with mortgage finance still being heavily rationed and consumer confidence slipping in the wake of the tough budget, it would be wrong to expect turnover to rise markedly over the balance of this year,’ he added.

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