The rate of house price growth dropped to the lowest level in over a year-and-a-half in December, as values in London have fallen for the first time since 2009, revealed the latest national property report.
There are huge differences around the UK, property experts have found, with Northern Ireland, Scotland, and the North West of England experiencing the strongest growth in property values. London is the only region where prices have dropped more than grown.
The Royal Institution of Chartered Surveyors (RICS) has said that as there is so little choice of properties on the market in the capital, it is “implausible” that prices will dip too much.1
It also said that if demand from hopeful buyers picks up from the current steady levels, increased competition for the few homes on the market would result in an upturn in house prices.
Around the country, 11% more surveyors saw property prices generally rising rather than declining in December; the weakest rate of price growth that the RICS has recorded since May 2013.1
London experienced high price growth in early 2014, however December saw 36% of surveyors in the capital reporting falling values.1
Property prices in London are expected to drop by 3.3% and nationally by 0.6%, a Centre for Economics and Business Research report revealed last week.1
House Price Growth at Lowest Level for 19 Months, say Surveyors
Generally, regions that have experienced slow house price growth recently are now showing stronger increases, as they surpass their pre-crisis peak.
In Northern Ireland, values have been recovering more slowly, however they saw the strongest price growth in December. 65% of surveyors there saw prices rising.1
Scotland showed the second strongest improvement in prices in December, with 45% of surveyors reporting rises. Regions in the North of England have also witnessed fairly strong price growth, as 34% of surveyors in the North West reported in December. 23% of surveyors in the North also reported increases.1
In Wales, 6% of surveyors reported rises, and the number in the East and West Midlands was 9%. In the South West, 16% of surveyors saw increases, and 24% in the South East.1
The RICS claim that the amount of new house hunters entering the market has dropped for six consecutive months. Additionally, the number of homes on the market is “close to historic lows”, it says. The volume of new properties being listed has fallen for ten out of the last 12 months.1
Chief Economist at the RICS, Simon Rubinsohn, says: “There is a risk that with so little housing available, any pick-up in demand could rapidly feed through into higher prices rather than higher sales.”
Housing market experts have estimated that the Stamp Duty reforms could push more people to buy and sell homes in the coming months, as for most of those that pay the tax, it will be lower than under the old system. But for those buying the most expensive properties, predominantly in London, the new Stamp Duty will be more.
RICS have claimed there is general optimism among its members that the changes will bring a 2-5% increase in both house sales and prices in the next year, however surveyors in London predict a sales drop of 5-10%, and prices by 2-5% as a consequence.1
Rubinsohn says that as well as a rise in buyer caution, responses to the RICS’s latest study reveal a general feel of uncertainty caused by the general election, which is contributing to the recent relax in the housing market.
He adds that as the amount of properties being listed in the market stayed flat for most of last year, “it seems implausible that the dip in demand will result in very much of a decline in house prices.”1
The Halifax predicted a rise in house prices last week; by only half of the 7.8% it reported in 2014, at between 3-5%.
The mortgage provider said that the rate of annual property price growth has been slowing monthly since the 10.2% peak of July 2014.1
In the past week, official figures have seen property prices increase by only 0.2% between October and November, as the average value of a house is £271,000, lower than the record high of £274,000 seen in August 2014.1