UK listing prices continue upward as sales fall, latest index shows

Property prices increased by 0.4% overall in England and Wales in August and 0.3% in Scotland but sales fell to a new record low for the month, according to the latest real estate index.

Property prices increased by 0.4% overall in England and Wales in August and 0.3% in Scotland but sales fell to a new record low for the month, according to the latest real estate index.

The data from Home.co.uk show that the South East remains the UK’s fastest moving regional market and prices outdo Greater London with a six month rise of 6.1%. Overall year on year prices were up 6.5% but this rise to 12.8% of £60,000 in Greater London.

Asking prices rose in all English regions, Scotland and Wales month on month with the biggest rises in the East of England and the South East at 0.9% and 1% respectively.

The index report says that buyer demand and short supply in London and the southern regions continues to drive the national average higher, but at a lesser rate than last year. The supply crisis is worsening and August recorded the lowest number of listings entering the market for that month since the onset of the financial crisis.

It suggests that the key driver for demand is the availability of mortgage finance, which remains abundant. Talk of interest rate rises at the Bank of England has not dented buyers’ appetite. Competition between investors remains fierce in London and surrounding regions where the lack of supply is felt most keenly.

Indeed, the data shows that in London and the East of England, the volumes of listings entering the market are down 15% and 18% respectively year on year and down 75% and 73% compared with August 2008.

‘These and other southern regions are clearly sellers’ markets and prices remain firmly on an upward trajectory. Marketing times in the South East region have been the lowest in the country since February. Across much of the nation, marketing times are currently around the lowest we have witnessed since 2008,’ said Doug Shephard, the firm’s director.

But he pointed out that in the North marketing times are considerably higher than in the South and prices are not rising appreciably and he predicts further upward pressure on prices over the coming months although the North-South divide remains one of the most daunting imbalances in the UK economy.

‘Whilst the stimulus enabled listing boom rages in London and the southern regions, the northern markets continue to stagnate. Price appreciation over the last 12 months in the northern regions lay in the range -0.2% to 1.4%,’ said Shephard.

‘Wales too shows little or no sign of market recovery, with a rise of just 1.4% since September 2014. Looking back across the last five years, we can see clearly the dramatic polarisation that has taken place in the UK listing market. Only three regions surpassed the average growth for England and Wales, namely London, the South East and the East of England,’ he explained.

‘This represents a vast concentration of listing wealth in and around the capital. Further afield, there are the Midland regions and the South West where house prices have merely kept pace with inflation over the same period. Meanwhile, in the North, Wales and Scotland, the picture is truly grim. The best performer in this third tier group, Scotland, is still dismal. During five years of ultra-low interest rates, Scottish house prices have not managed to increase more than one per cent per annum. Wales, Yorkshire and the North West have all performed slightly worse over the same period. However, nominal asking prices in the North East have actually gone backwards with a fall of 0.4% over the same time,’ he added.

The firm says its evidence suggests that the recovery experienced in the South is not migrating northwards. ‘On the contrary, the concentration of wealth and jobs in the South is eliciting key worker migration, leaving the North deskilled. Moreover, as more job seekers gravitate to London and the surrounding areas, the housing crisis, that really only exists in this region, is exacerbated,’ Shephard said.

‘With prices in London up 53.5% and the North East down 0.4% over the last five years, it is clear that the northern and southern listing markets are poles apart. We maintain that, in view of such diversity of fortunes across the country, it is near impossible to imagine how the Bank of England can realistically raise interest rates anytime soon,’ he added.

‘Property markets in the North and Wales remain very fragile and would suffer significant declines should the cost of borrowing rise, causing negative equity and devastation of mortgage lenders’ balance sheets,’ he concluded.

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Source: Property News Spain