Average home prices increased marginally in England in January month on month and fell in Scotland and Wales with a north south divide showing in the latest published index.
Average prices in England increased by 0.3% compared to December and fell by 0.2% in Wales and fell by 0.3% in Scotland, according to the Home.co.uk index.
Price growth in England was led by a 1.9% month on month rise in the East of the country, taking the average price to a new all-time high if £348,651. But Greater London saw the weakest growth in England with a monthly rise of 0.1% and prices in the capital are now 1.2% lower than a year ago.
The overall rate of annual home price growth for England and Wales fell to 3% while in Scotland annual growth was 2.3%, taking the average price in England and Wales to £298,445 and in Scotland to ££177,037.
After the East of England, the next best regions for price growth were the East and West Midlands, the North West and the South West with all four showing price growth of between 4.9% and 4.1% over the last 12 months.
The report also points out that both the East and West Midlands have seen some of the largest annualised rent increases at 11.4% and 12% respectively. But Yorkshire recorded the largest rent rise at 14.4%. Rents were down by 1.4% in Scotland and hardly moved in the North East with growth of 1.7%.
Doug Shephard, Home.co.uk director, believes that prices could rise in regions where rents are increasing as it is a sign that buy to let investment is strong. ‘It is an established fact that some of the best BTL yields in the country are to be found in the North, and Yorkshire will not be alone in attracting the attention of investors going forward,’ he said.
‘On the basis of buy to let investment yield, Wales, the North East and Scotland also look promising. However, the various new tax rules recently imposed will mean astute investors will be incentivised to focus on locations that offer the best yields and rising rents,’ he pointed out.
‘Home prices have been, are, and always will be underpinned by rents. Yields, be they dividends, interest on capital or rents, are always tied to the underlying investment. In today’s near zero interest rate environment and volatile stock markets, unprecedented sums have been ploughed in to the property market in search of a decent return on capital,’ he added.
‘In today’s property market it is investment, or lack of, in the private rented sector that ultimately will dictate the direction of the regional markets. Moreover, should the sector be further disincentivised, for example by more regulation or taxation, then we may see the whole market turn to the downside,’ he concluded.