Yahoo Finance House Prices Hit Record High in March
House prices in the UK hit a record high in March. With unemployment at historic lows and real inflation set to pick up, momentum in the market is beginning to build, according to commentators.
The average house price last month was £227,871, the highest on record according to the monthly Halifax House Price index. Prices in the first quarter of 2018 were 2.7% higher than in Q1 2017, up from 1.8% in February.
That said, prices in the first three months of this year were flat – down 0.1% – compared to the final quarter of last year. This is the second consecutive decline on an annual basis. Meanwhile, mortgage approvals are also down compared to 12 months ago despite being at their most affordable levels in a decade.
“This lack of direction in the housing market is in stark contrast to the continuing strength of the UK jobs market,” says Russell Galley, managing director at Halifax.
“In the coming months we expect price growth to remain close to our prediction of 3% despite the very positive factors of continuing low mortgage rates, great affordability levels and a robust labour market. The continuing shortage of properties for sale will also support price growth.”
There was a note of caution to the figures. Jonathan Hopper, managing director at Garrington Property Finders, saying the month-on-month jump – of 1.5% compared to 0.55 in February – shouldn’t be taken as a sudden booming of pent-up demand.
“On a quarterly basis prices are still stagnating; and nationally the market remains stuck in its familiar pattern of tantalising inertia,” he continues.
Buyer confidence remains in short supply, he continues, with most “unhurried and acutely price sensitive”. “Despite the shortage of homes for sale, most buyers won’t hesitate to walk away from a property they feel is overpriced.”
Signs of Optimism
However, the economic picture seems to be brightening. Wage growth has been below the rate of inflation since late 2016, meaning consumers have seen their spending power squeezed. However, the effects of sterling weakness and higher oil prices are set to fade. As a result, inflation should end the year nearer to the Bank of England’s 2% target.
Consequently, Russell Quirk, founder and chief executive of online estate agent Emoov, reckons well see a return to stability over the coming quarter. Hopper agrees, saying that a period of a “meandering but stable market is what’s needed”.
“Unchecked house price inflation is neither desirable nor sustainable, so the current situation is a useful one as it is supporting confidence levels and helping prevent a large correction.”
A “healthy bounce” is predicted for this month, though. Spring is traditionally a busy period for the property market. This is a “window of opportunity” for those homeowners who delayed marketing their properties until the end of March, according to Sam Mitchell, chief executive of online estate agent housesimple.com.
Hopper adds that many of the estate agents his company works with are preparing to release a lot of new stock once the schools return.
Looking further forward, Quirk notes that current level of mortgages, a reduction in unemployment and insufficient housing stock will continue to stimulate the market. He thinks price growth should exceed wider predictions over the latter part of the year.
Further, Brexit fears have abated, and Mitchell says the stamp duty freeze for first-time buyers has helped stimulate the market, particularly in the North of England. “Savvy sellers who are pricing effectively are having no problems getting offers,” he says.
