Property prices in the UK up marginally in November

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Property prices in the UK up marginally in November

Property prices in the UK edged up 0.3% in November to an average of £214.044 and are 1.9% above the same month a year ago, the latest lender index shows.

Looking forward, much will depend on how broader economic conditions evolve, according to Robert Gardner, Nationwide’s chief economist.

‘In the near term, the squeeze on household budgets and the uncertain economic outlook is likely to continue to dampen demand, even though borrowing costs remain low and the unemployment rate is near 40 year lows,’ he said.

‘If the uncertainty lifts in the months ahead and employment continues to rise, there is scope for activity to pick-up through next year. The squeeze on household incomes is already moderating and policymakers have signalled that, if the economy performs as they expect, interest rates are only expected to rise at a modest pace and to a limited extent in the years ahead,’ he added.

The November index report also looks at housing supply in England over the last decade and says that it has grown by 1.9 million, a rise of 8.5%. The strongest growth has been in the South West, London and the East of England, and Gardner pointed out that these are amongst the areas that have seen relatively strong house price growth over this period, suggesting supply is responding to price signals.

Meanwhile, in regions such as the North East and North West, where house prices are still near 2007 levels, growth in supply has been more modest.

However, in contrast to most regions, London is seeing a slowing in net additions to supply this year, with a drop of around 20%. Gardner said that this was due to a reduction in new build completions and also lower ‘change of use’ additions. ‘This is likely to be in response to changes in market conditions in the capital, with modest price falls being recorded in recent quarters and demand remaining relatively subdued,’ he added.

However, mortgage experts point out that prices are still too high for many first time buyers. ‘For those struggling to get onto the property ladder, the rise in house prices will once again take them further away from their goal,’ said Dilpreet Bhagrath, of online mortgage broker Trussle.

‘A first time buyer deposit costs nearly two years’ of average earnings, not taking into account any expenditure, so those looking to get on the ladder are facing a long journey to home ownership,’ he added.

Steve Seal, director of sales and marketing at Bluestone Mortgages, also believes that aspiring home owners are still struck with obstacles, particularly if they are self-employed and don’t meet the criteria of many big name lenders.

He pointed out that research from The Mortgage Lender showed that one in five freelancers were reconsidering their employment status because they had been refused, or were afraid of being rejected for a mortgage.

Source: www.propertywire.com