Property in short supply in Camden, as prices rise but growth rate slumps
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House prices are back on the rise after June slump, but annual growth is at its lowest rate since April 2013
The Halifax House price index has revealed both a monthly and annual increase. House prices increased 2.1 per cent in July in comparison to the same month in 2016, and 0.4 per cent up from June.
However, the rate of growth has slumped from the 5.7 per cent recorded in January, and is the lowest annual rate since April 2013. House prices recorded the fourth quarterly fall in a row, falling 0.2 per cent between May and July.
The figures suggest that crawling house prices and mortgage approvals are flatlining, but remain on the up. “The general trend of flat prices is not surprising with effects of stamp duty, Brexit and ongoing political uncertainty continue to weigh on the market,” said Camilla Dell, managing partner of Black Brick Property Solutions.
Sluggish supply and downbeat demand
Camden and Haringey place in the top five boroughs recording the highest falls in supply. HouseSimple.com have revealed that supply in Camden fell 19.1 per cent, with Haringey recording 19.8 per cent. Overall, supply in London declined 4 per cent last month, with the Royal Institution of Chartered Surveyors claiming stock levels are at an all time low, the figures for June marking the 16th consecutive monthly fall in new instructions.
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Over the past five months, house sales have continued to breach the 100,000 mark. However, with low supply, mortgage approvals have declined 0.7 per cent between May and June to fewer than 65,000. Transactions between May and June were just 97,000, marking a 3 per cent decline.
“The trend of little stock being available is definitely something we have noticed in recent months as sellers either decide not to sell, rent, or try and sell discreetly,” said Ms Dell.
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“As a result our services have been more in demand than ever before as buyers struggling to find homes turn to buying agents to try and assist them. So far this year 38 per cent of transactions we have done have been off market, a 10 per cent increase on this time last year.”
Although unemployment is at its lowest rate since 1975 (4.5 per cent), consumer spending power has not yet felt the impact, argues Russell Galley, managing director at Halifax Community Bank.
He said: “This improvement in the jobs market has not, as yet, boosted wage growth, resulting in earnings rising at a slower rate than consumer prices. This squeeze on spending power, together with the impact on property transactions of the stamp duty changes in 2016 now being realised, along with affordability concerns, appear to have contributed to weaker housing demand.”
First Time ain’t the Charm
Jeremy Duncombe, director of Legal & General Mortgage Club commented on the implications of rising house prices for first timer buyers: “With prices still rising, first-time buyers are now on average having to save for over 11 years to save enough just for a deposit, and for those who are unable to save, they face staying in Generation Rent indefinitely.” Mr Duncome argues that a long-term strategy is needed to address the housing shortage.
CEO of eMoov.co.uk, Russell Quirk, commented: “Yet more promising signs for the UK housing market with further evidence of a marginal uplift in prices on a monthly basis. Time certainly seems to have been a healer and as we move away from the previous period of political uncertainty that has plagued the property market of late, we should see a growing degree of stability return for UK homeowners.
“Although prices are still down on the previous quarter and price growth is likely to remain fairly subdued for the remainder of the year, they continue to be up on an annual basis and given the current seasonality an increase no matter how small is a good sign during the peak of the summer months.”
Buying agent Henry Pryor is sanguine about the future of the housing market. He said: “Halifax data confirms that there is a relative shortage of stock, that mortgage advances are slowing but that for those who want a home there are opportunities without taking big risks.
“I remain cautiously optimistic about the rest of 2017, I’m expecting those canny buyers who act now may well be laying down the foundations of their future property fortunes,” he said.
“A continued low mortgage rate environment, combined with an ongoing shortage of properties for sale, should help continue to support house prices over the coming months,” added Mr Galley.
Mr Pryor cautions against using the House Price Index as a barometer for the health of the local market and the microcosm of postcodes like NW3.
He said: “Today’s numbers from Halifax is the latest attempt to gauge to health of the UK housing market. As readers will know, a national weather forecast may be of passing general interest but doesn’t usually help us to decide if we’ll need a brolly in NW1!”
The solution is, and we’ve heard it time and time again; price reasonably. Mr Pryor warns that in the local market it is harder to sell than to buy, although transaction figures confirm it can be done.
“It is price-sensitive and the days of being able to use a random number generator to set your asking price are behind us. Those wanting to buy have the money and enthusiasm if they can be satisfied that they are not paying over the top” he said.
“Estate agents recognise the challenges, they are already more cautious when advising on price and most now appreciate that those wanting to transact can only do so if they are soberly advised.”