Reduced housing stock has created a short-term sellers market that has inflated price growth for the month of February according to a recent report.
Halifax House Price Index have found property prices have increased by 2.8% annually, an increase of 2% from the 0.8% annual growth recorded in January.
Prices have also increased 1.8% between December and February, with the average house price now £236,800.
Overall, monthly home sales remained steady and the 101,170 residential sales in February falling just below, but in line with, the five year average of 101,291.
With the number of approved mortgages rising by 3.6% to 66,766 in January and the monthly approval rate of 66,366 slightly above the 5 year average, it would seem that buyers are returning to the market.
However, when these figures are combined with the most recent RICS UK Residential Market figures that claim property stock levels are down 31.5% and NAEA Propertymark statistics that highlight a 14% fall in available stock in January, creates a perfect storm for buyers to reap the rewards of increased prices because of a condensed market.
Guy Gittins, Managing Director at Chestertons, said: “The number of new properties coming onto the market at the start of the year in the capital was down 22% compared to 2018. This shortage of available properties for sale, combined with rising buyer demand (Chestertons year to date increase is a staggering 38%), slowed the rate that house prices have been falling in London. Following two years of substantial price drops, the market is now bottoming out. Property values in the capital – particularly in prime locations – have now come down to a level that is proving increasingly attractive to potential buyers, driving a huge surge in the number of people registering with agents and buying property since January. This dramatic imbalance between supply and demand is starting to fuel small price increases in areas like Hyde Park, Fulham and Putney as competition ramps up.”
Iain McKenzie, CEO, The Guild of Property Professionals, commented: “There is still a shortage of supply throughout the UK property market which certainly underpins house price growth, but these latest figures showing an increase annually, quarterly and monthly proves that the housing market remains remarkably resilient. Once we have an outcome for Brexit consumer sentiment will slowly improve and demand, which is very much evident in today’s market, will start to be met with an increase in supply levels.”
Russell Galley, Managing Director, Halifax, said: “House prices have grown on an annual, quarterly and monthly basis for the first time since October 2018, taking the average house price to £236,800.
“The shortage of houses for sale will certainly be playing a role in supporting prices. House price growth is now at 1.8%, an increase from the 0.6% fall last month, and back at the rate we saw from July to September 2018.
“Annual house price growth at 2.8%, is within our expectations, but is fairly subdued compared to 2015 and 2016, when the average growth rate was 8.3%.
“People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident.”
What does the reduced housing stock mean for the property market moving forward? Is there likely to be an increase in available property before a clear Brexit outcome is announced? Do you anticipate that the bulk of home movers will wait to see the fallout of Brexit before placing their property on the market?
