House prices bounce back in June, but it’s a different story for prime north London
- Credit: PA Wire/PA Images
House prices rose for the first time in three months according to Nationwide, but prime north London property is still price sensitive say local experts
Prices rose for the first time in three months in June, growing 1.1 per cent month on month to 3.1 per cent as the gap between the strongest and weakest performing regions narrowed to an all time low in the second quarter of this year according to Nationwide’s latest House Price Index.
However, with monthly growth rates traditionally volatile, especially on a regional level, it might be wise not to hold your breath for a fanfare of property positivity.
London property didn’t perform as well, with average prices of £478,142, just 1.2 per cent up in the second quarter, and an increase of 5 per cent over the last year, and north London faring no better.
Although prices in the capital are 55 per cent above 2007 levels, London is the second weakest performing region in the UK in the second quarter of this year. Soberingly, the figures mark the weakest pace of growth since 2012.
In England as a whole, house prices fell by 0.3 per cent during the second quarter, but rose 2.8 per cent over the last 12 months. The average house price is now £211,301, up from £208,711 in May.
You may also want to watch:
Price growth is modest at best, said Robert Gardner, chief economist at Nationwide:
“Annual house price growth edged up to 3.1 per cent from 2.1 per cent in May. In effect, after two sluggish months, annual price growth has returned to the 3-6 per cent range that had been prevailing since early 2015.”
With growth creeping along with all the enthusiasm and pace of a drunken snail, the gap in growth between household income and house price inflation is continuing to squeeze the pockets of buyers as mortgage approvals drop even further.
- 1 Petrol station forecourts closed and long queues in north London
- 2 'We've been forgotten': Homeless Muswell Hill family demand action
- 3 ‘I was livid': Outrage as Camden homeless man sprayed with hose
- 4 'Land grab': Muswell Hill Gail's accused of taking over pavement
- 5 Mayor of Camden joins West Hampstead Primary School renaming fair
- 6 Man jailed for rape of young girl in north London 40 years ago
- 7 How did a double-decker bus crash straight into a Crouch End house?
- 8 Explore 8 of north London's prettiest streets
- 9 Crunch! Eliana and Ariella's granola business success
- 10 New Jewish Fringe festival comes to Golders Green
Demand and supply
Gardner cautions that price increases across the country could be due to the dearth of homes coming to market, pushing asking prices up for those that are looking to buy, as opposed to strengthening demand and low mortgage rates.
“While survey data suggests that new buyer enquiries have softened, it also indicates that this has been matched by a decline in new instructions. Indeed, the number of properties on estate agents’ books remains close to all-time lows,” said Gardner.
Gardner warns that with rising inflation on the cards, house prices are likely to remain sluggish without a rise in household incomes, expecting just 2 per cent growth over the rest of the year.
Jeremy Duncombe, director of Legal & General Mortgage Club commented: “House prices continue to rise above inflation. Whilst demonstrating the market’s resilience in the face of political uncertainty, this will be sobering news for many first-time buyers who are struggling to make their first step onto the ladder. For a healthier market, what we need to see is property prices rising in line with inflation.”
Not so super Prime
New figures from Savills show that house prices in Prime London fell 0.9 per cent in the second quarter of the year. That’s equivalent to -5.3 per cent year on year and almost a 7 per cent fall since the market peaked post-financial crash in 2014. Prime Central London has fallen 1.3 per cent in the last three months, 6.8 per cent year on year and 14.4 per cent from its peak.
With increased caution amongst buyers thanks to future economic uncertainty, it’s the most expensive property which has been disproportionately affected. In Prime Central London, price growth over 10 years is below average for the Prime market at 23.4 per cent.
The glut of homes in the super prime £10 million plus bracket is also a factor.
“With super prime stock, there’s actually quite a lot of choice around for people which is having some impact,” said Mark Pollack, director at Aston Chase.
“People are seeing better value outside of London in the country and provinces regionally than they are in Prime Central London.”
Savills did predict that prices in Prime London would vary in the wake of last year’s decision to leave the EU, but in contrast to their prediction that growth would remain at zero, it is now more likely that year to date losses will remain unrecovered. Losses to date in Prime Central London are -2.1 per cent, and -1.2 per cent in Prime London.
The importance of being earnest (when pricing)
The importance of pricing correctly has never been so apparent. “Where vendors have realistic price expectations, which reflect these falls, sales are proceeding,” said Lucian Cook, head of residential research at Savills. “But there is a lack of urgency in the market and vendors who need to sell may need to adjust their expectations further.”
It’s all relative
Mr Pollack questioned the application of Nationwide’s national data to the micromarket of London.
“I would say that the latest house price relevance is probably not too relevant to the London market,” he said. “Markets vary considerably across the country and even London has micro markets within markets, but at the moment we are definitely on a bit of a go slow.”
Mr Pollack noticed an increase in the first quarter of 2017, which he attributed to pent up demand left over from the second half of 2016 after the vote to leave the EU, with international buyers also taking advantage of a weak pound.
“People had decided that if they wanted to make a move, to get on with it, they were coming to terms with stamp duty land tax; it’s still a bitter pill but never the less not going away,” he said.
As for the second quarter, Mr Pollack said: “Both Nationwide and Savills it would seem are saying that London is down in the second quarter of 2017, and while Nationwide are reporting an increase in prices nationally, perhaps that’s not applicable to London.”
He anticipates a bumpy few years ahead for the London housing market. “It’s clearly very price sensitive because there’s no indication that the market is on the cusp of spiking. People are just under no pressure to do anything,” he said.
Aston Chase largely deals in the Prime markets in central and north London, where Mr Pollack has seen prices fall in the second quarter, due to the General Election and Brexit leading to a lack of urgency.
“I don’t foresee any crash but I do foresee little or no growth for the foreseeable future until we get some stability politically and from a Brexit perspective which I think is making people very reticent to commit themselves unless absolutely necessary.
“I’m not saying there’s not activity but it’s much more sporadic and price sensitive,” he added.