UK property prices will continue to rise due to the ongoing supply-demand imbalance, Halifax has said
With the continued low interest rates and the under-production of new housing to meet demand, UK house prices are predicted to continue growing for the foreseeable future.
The latest January report released from Halifax shows the average price of UK property dropped slightly by 0.9% from December, after four successive months of growth. The average cost of a residential home is now at £220,260. Despite the short-term decrease, the annual growth rate in January remains a strong 5.7%.
Martin Ellis, an economist at Halifax, believes that housing prices will continue to rise in 2017 despite the uncertainties brought by weaker economic growth.
"UK house prices continue to be supported by an ongoing shortage of property for sale, low levels of house building, and exceptionally low interest rates. These factors are unlikely to change materially during 2017," he said. He expects there will be a smaller growth in house prices in 2017.
“Nonetheless, weaker economic growth and increasing pressure on spending power, along with affordability constraints, are expected to dampen housing demand, resulting in some downward pressure on annual house price growth during the year.”
Founder and CEO of eMoov, Russell Quirk, suggests that the public should avoid overinterpretation of the small drop. “There are those that will, of course, see this marginal monthly drop in house prices as a fulfilment of the Armageddon-style prophecies that have plagued the UK market since the start of last year, with many widely predicting a troublesome year ahead for property.”
The latest Hometrack UK Cities House Pirce Index also shows a weakening growth of housing prices in the country. The annual price inflation has dropped to 6.9%, when compared with 7.2% last month and 7.9% last year. The drop in the price inflation in the capital is especially noticeable – where the year-on-year price growth in London has dropped to 6.4%, the lowest level in 42 months.
The Hometrack index monitors house prices across the UK's 20 biggest cities. They have shown that the London housing-price growth rate has been outpaced by many other large regional cities. This has been realised by investors who usually would favour London, are now looking to the North and Midlands for property investment opportunities.
Richard Donnell, insight director at Hometrack, suggests properties in other big cities such as Manchester, Liverpool and Birmingham can provide a more favourable return. “Growth in London has been superseded by large regional cities such as Manchester, Liverpool and Birmingham.” With 8.3% growth, Manchester is the city with the greatest uplift in house prices outside of Southern England.
He is not surprised by the fall in house price growth in London. “When you consider that house prices in London are 85% higher than they were in 2009 it is not surprising that the pace of increases is slowing toward a standstill as very high house price increases mean affordability is stretched.”
Bristol Post, Halifax predicts housing market slow-down; The Sun, PROPERTY PRICE BOOM Forget the London property bubble – house prices are rising MORE in Liverpool and Birmingham, https://www.thesun.co.uk/living/2939808/forget-the-london-property-bubble-house-prices-are-rising-more-in-liverpool-and-birmingham/
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