Mixed fortunes for house prices across the UK

House prices went up by 0.1% in October taking the annual rate of house price growth to 6.9%, according to the Office for National Statistics (ONS).

The ONS data lags behind the Halifax and Nationwide house price indexes because they use their own data on mortgage lending whereas the ONS uses a wider range of mortgage data from lenders and the Land Registry and then “mix-adjust” it to show different property types and locations and seasonal adjustments.

It means that the average UK house price is now £216,674, according to the ONS data.

The ONS said: “Housing market indicators for October suggested a period of modest increasing demand and steady growth in price levels.

“There is evidence of recovery in the housing market since the weakness seen in the immediate aftermath of the referendum. The extent of the pickup was variable across regions and price brackets.”

Prices

The East of England saw price rises remain strong, up by 12.3%, down from 14.9%, in the three months ending in October. By contrast London saw a larger fall in house price growth, down from 13.8% to 7.7% for the same period. Growth in the south east was second highest at 9.1%.

Locations close to London saw the fastest price increases but the City of London itself and Aberdeen saw the biggest falls. Prices in Basildon went up by 19.9% and Slough saw increases of 19.6%. However, the City of London and Aberdeen saw prices dip by 8.8% and 8.7% respectively.

Overall, England saw a 0.1% fall in house prices in October compared to September, down to £232,655, Scotland and Northern Ireland both saw 0.8% increases to £143,131 and £124,093 respectively and Wales saw prices go up by 1% to £147,065.

Demand

Demand for housing remains strong, according to the latest Royal Institution of Chartered Surveyors (RICS) market survey for October which reported a modest increase in new buyer enquiries.

Meanwhile, the Bank of England said mortgage approvals increased by 6.2% from September to October 2016, although this is still 3.3% lower than October 2015.

Sales

Overall UK sales went up by 1.0% between September and October 2016 but were down by 8.0% on October 2015.

There were larger drops in sales volumes in the UK than prices. Compared to 12 months before, England saw a 20.3% fall to 67,396 for August 2016, Scotland saw sales volumes dip by just 2.8% to 8,468, Northern Ireland saw a 10.7% fall to 5,200 and Wales recorded a 11.6% fall to 3,558 in the month.

Supply

RICS recorded a fall in new sales listings in October 2016 compared to September 2016 but the ONS construction output reported no change in total new housing per quarter but said total new housing is 8.7% higher than the third quarter of 2015.

Comment

Stephen Wilson, Managing Director of Stirling Ackroyd said: “London’s house values have slowed to the pace of the rest of England, as demand for homes in commuter towns in the East and South East are pushing up property prices in these regions.

“In London, we’re now seeing a tale of two cities. Prime Central London is witnessing a decline in values. This has caused the Capital’s average house price to fall month-on-month. However, in zone two and the outer boroughs, house price growth is holding as buyers prioritise value for money.

“It’s also noticeable that in boroughs where the average property price falls into the second highest Stamp Duty bracket, values are falling. First-time buyers are also being held back by stamp duty, which is a huge burden on top of saving for a deposit. This is a clear failure of the policy as it hinders the help the Government provides through Help to Buy. Hopefully, the Government will consider reforming the policy in their new White Paper.”