Property News

Annual House Price Growth Remained Sluggish in February

Rose Jinks - March 1, 2019

Annual house price growth remained sluggish in February, according to the latest House Price Index from Nationwide.

The building society found that the average house price in the UK increased by 0.4% in the year to February. On a month-on-month basis, property values experienced a marginal decline of 0.1%, taking the average house price to £211,304.

Robert Gardner, the Chief Economist at Nationwide, comments on the figures: “After almost grinding to a complete halt in January, annual house price growth remained subdued in February, with prices just 0.4% higher than the same time last year. 

“Indicators of housing market activity, such as the number of property transactions and the number of mortgages approved for house purchase, have remained broadly stable in recent months, but survey data suggests that sentiment has softened.”

He observes: “Measures of consumer confidence weakened around the turn of the year and surveyors reported a further fall in new buyer enquiries over the same period. 

“While the number of properties coming onto the market also slowed, this doesn’t appear to have been enough to prevent a modest shift in the balance of demand and supply in favour of buyers in recent months.”

Homeownership

Gardner assesses homeownership levels: “The latest English Housing Surveyfrom the Ministry of Housing, Communities & Local Government (MHCLG) showed a slight rise in the homeownership rate in 2018 to 63.5% (from 62.6% in 2017). 

“The rise in homeownership was driven by an increase in the number of people owning their home with a mortgage, which began to increase again after declining continuously since 2005. The number of people owning their own home with a mortgage rose by 5% over the year to 6.9m, though this is still 20% below the peak recorded in 2000.”

He reports: “Supportive labour market conditions and a number of policy changes, especially in the regulatory and tax system, have improved the bargaining position of homebuyers relative to investors. Government schemes, such as Help to Buy: Equity Loan, have also helped support first time buyer numbers. 

Annual House Price Growth Remained Sluggish in February

“The biggest improvement in homeownership over the past year has been amongst those aged 35-44, helping to reverse some of the decline seen in the last few years. Nonetheless, at 57%, the homeownership rate amongst this age group is still well below its 2006 peak of 73%.”

Gardner adds: “The number of households owning their homes outright remained at a record high of 7.9m. This figure has increased by 1.2m over the past decade, almost entirely amongst homeowners aged 65 or above.” 

Comments

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, responds to the data: “It’s a pretty unremarkable start to the year, but, assuming there’s no delay to Article 50, this is going to be the mood music until we get through to April. 

“February can be a mixed bag, but it’s generally a time of year when the market starts to really pick up in terms of post-Christmas activity. There are extenuating circumstances now, of course, that are affecting that typical pattern, and delivering us the first quarterly fall since the middle of 2018. 

“The market is falling in real terms, but, in the more expensive parts of the country, particularly London, it’s going to take a more significant retreat in prices to pull first time buyers to the table in significantly greater numbers.”

Steve Seal, the Director of Sales and Marketing at Bluestone Mortgages, also comments: “Although modest house price growth will be welcomed by buyers, other financial obstacles are still blocking many from accessing affordable lending. High street lenders do not have the underwriting capacity to assess customers outside the traditional mainstream criteria, and this particularly affects those who have a blip in their credit score.

“However, there is support available for these customers, particularly within the specialist market. Bluestone Mortgages revealed that 37% of brokers believe the specialist market is set to grow by at least £1-£5 billion over the next six months – no doubt a result of the growing numbers unable to fit the vanilla mould. Specialist lenders can provide tailored solutions, and not simply basing this off a number on a computer screen.”