The forthcoming EU referendum is having little effect on house price growth across the UK, according to the Resolution Foundation.
In response to the Government’s latest house price data, the organisation reports that there is little sign of a slowdown in growth, despite uncertainty surrounding the EU referendum and concerns over whether a housing bubble could burst.
The house price index found that the average UK house price rose by 8.2% in the year to April. The Resolution Foundation believes that the rush to purchase buy-to-let properties ahead of the introduction of the 3% Stamp Duty surcharge on 1st April has only marginally reduced the rate of growth, down from 8.5% in March.
EU Referendum Has Little Effect on House Price Growth
Similarly, signs of property market confidence declining, particularly in London, have not yet fed through into house prices.
The Resolution Foundation has found that across the UK, house prices have increased by more than 2.5 times the rate of average weekly earnings growth since April 2011. The average house price rose by 24% over the last five years, while weekly earnings have increased by just 9% in the same period.
London continues to dominate when it comes to the difference between incomes and house prices, with property values rising by 15% in the last year alone. However, the body warns that the contrast between incomes and house prices is not unique to the capital, with other parts of the country, such as the East of England, also under stress.
The Senior Policy Analyst at the Resolution Foundation, Lindsay Judge, says: “Despite the turbulent political background, house prices continue to rise sharply. Hopes that the house price hare would slow down and allow tortoise-paced income growth to catch up are not showing up in today’s data.
“The wedge between house prices and incomes continues to grow with real implications for living standards for many households. Large parts of the UK remain unaffordable for below-average earners hoping to buy.”
The Director of e.surv chartered surveyors, Richard Sexton, also comments on the data: “There has been a noticeable stumble ahead of the EU referendum, but the housing market remains in great shape. UK house prices have certainly come a long way over the last couple of years, and in this era of flexibility and adaptability, there’s little sign of a sustained let-up. This growth has not just centred around London; it’s spilling out across the nation, with the East and South East looking to challenge the capital’s housing prowess.
“Despite the short-term uncertainty of next week’s EU referendum, regional property markets are receiving a pre-summer swell, giving homebuyers more choices. And whilst a lift in prices doesn’t spell completely bad news – marking real demand and strong local housing momentum – it does mean more work is needed for first time buyers. As deposits climb alongside asking prices, the housing market demands a new flexibility from lenders in assessing affordability and creditworthiness.”
Sexton adds: “But whilst this is already happening, driving growth out to the regions around London, many prospective buyers are looking further afield. The North East is a land of opportunity, with lower growth and prices just over half of the UK average. Small-deposit lending totalled 18.4% across the UK in May, so for those prepared to take a leap of faith and venture out of the capital, lenders are keen to help.”