Price rises accelerate despite winter slowdown

House prices increased 1.2% from November to December according to Land Registry’s House Prices Index (HPI). This marks an acceleration from November’s month-to-month increase of 0.4%.

The rise puts the average house price in England and Wales at £188,270, up 6.4% on twelve months ago.

Regionally, prices in the capital rose fastest, up 2.1% and 12.4% month to month and over twelve months respectively putting the average house price comfortably over half a million at £514,097.

The poorest performing region was Wales with prices down 0.8% monthly. However prices still rose 3.4% in 2015. The North East was the poorest performing region with prices falling 0.7% in December, almost half of the growth accumulated over the previous year with the average property price dipping below £100,000 at £99,069.

Land Registry also published their most up to date Sales Volumes data for October, which saw a drop of 8% on October 2014. to 79,960 for England and Wales. The number of repossessions also fell by 51%, from 888 to 431 for October 2015 compared with October 2014.

Richard Sexton, director of chartered surveyor e.surv, said: “The figures suggest a slowdown in sales, as the lack of homes on the market starts to impact on property chains. It’s a vicious circle – the lack of listings is dissuading many homeowners from moving, so instead some families may be choosing to renovate and extend properties to suit their changing needs. This further diminishes the choice on offer.

“A shortage of homes for sale is particularly difficult for those looking to get onto the ladder for the first time, as the stock of affordable homes shrinks. Incentives to encourage last-time buyers to downsize and free-up family homes, to create more movement in property chains and allow families the options they need may help – for example, reducing stamp duty fees for those choosing to downsize – would be one way to encourage this.

“With demand remaining strong, now is a terrific time for sellers, who are seeing their properties command strong prices. The areas surrounding the capital – in particular the South East and East Anglia – are being lifted by demand patterns rippling out from London, as buyers look to bag more affordable deals outside of the capital. The strong jobs market in areas like Cambridge and Reading is also a honeypot encouraging many to move into these areas.”

Peter Rollings, CEO of estate agents Marsh & Parsons, said: “Property values were climbing right up to the wire in 2015, giving homeowners a last-minute confidence boost around Christmas. Buyers also had plenty of reasons to feel positive, following the Chancellor’s Autumn Statement proclamations and the persistence of low mortgage rates. This optimism on both sides of the fence was combining to stimulate activity throughout the housing market.

“London house prices have travelled the farthest distance over the past year, with growth well into double-digit territory fuelled mainly via price rises outside prime central London. But the housing market in the capital has also had some of the biggest obstacles thrown in its way, and so we’re still looking at substantially reduced price rises in the centre. Compared to a year ago, million pound property sales have slipped back 2% in the capital since stamp duty reform levied higher taxes at the middle and top-end of the property market.

“Both buyers and sellers at that level are having to be more price sensitive, and adjust their expectations. It remains to be seen how the second wave of stamp duty change targeted at buy-to-let investors may similarly distort the London market – but in the short-term, we’ll see a rush of demand from landlords and second home purchasers in the run up to April, which means heightened competition for first-time buyers.”

Today's Conveyancer