Recently the media are using property price indices in the ‘hope’ that they get evidence that property prices are going to fall – this helps to drive scary news headlines which the media believe increase eyeballs to their news sites!
However, we are looking at any indices with a great deal of caution. Due to a lack of robust data there are some that have even been suspended, including our ‘main report’ we rely on the government’s Land Registry.
Instead we are relying on ‘hitting the phones’ and talking to people we trust who are actually on the ‘front line’ of sales and understanding not just the numbers but the conversations they are having with buyers and sellers as confidence drives the market up and down and it’s this we are trying to get to grips with.
As the Land Registry data runs behind by a few months, the information they have just published takes us up to the end of Q1, just as the lockdown started.
As you can see from a country perspective, Northern Ireland was performing the best year on year – but journalists shouldn’t get too excited! Even though March’s property price inflation looks amazing since 2005, what this misses is that prices are still -37% below the average for 2007.
So headlines of price growth for Northern Ireland should always be viewed with caution, many properties are still in negative equity!
Wales and Scotland price increases are about on par with 1.5% inflation while England was running at just above.
Source: UK HPI
On average UK house price growth was up 2.1% year on year.
For those that over performed, regionally, average house price growth year on year varies from 4.7% up in London – seeing a rebound thanks to the ‘Boris’ and ‘Brexit’ bounce, in line with average annual house price growth going back to 2005 (15 years). This was followed by the South West seeing growth of 4.1%, a good performance vs the last 15 years, while the North West also saw positive growth of 3.4%, higher than the average 2.3% over the last 15 years, but half that of annual price growth seen since 2000.
The lowest growth was recorded in Yorkshire/Humber with prices there falling by -1% year on year, with the West Midlands achieving just a 0.4% increase.
Overall though, most areas prior to lockdown were performing below their average annual rate of price increases over the last 15 years.
This will be interesting when we get our heads around what happens to house prices post the lockdown as this is the first time we have gone into a recession without house prices booming.
Source: UK HPI
I mentioned at the start we were treating property indices’ data cautiously, so although Leicester and Tunbridge Wells were recording property price increases of over 12% year on year, I’m questioning whether that is correct as we haven’t seen those kind of increases for years anywhere and on top of that this is an increase for one month only. Normally when prices increase, we see them building over a series of months, not a sudden burst.
With the average increase of 2.1% price growth year on year, out of the 27 towns and other cities we monitor:-
10 were down year on year, ranging from falls in Reading of 5% through to Bradford’s falls of just 0.3%.
Six achieved the same average annual increase as we’ve recorded over the last 15 years, including Brighton and Hove and Edinburgh.
10 performed better than their average annual increase, but this does include the rather odd figures given for Tunbridge Wells and Leicester.
Source: UK HPI
RICS - “For new buyer enquiries, the headline net balance moved from a record low of -94% in April, to post a reading of -5% in May. As such, this indicator is consistent with a much more stable demand picture over the month. Alongside this, although the newly agreed sales indicator remained in negative territory, the latest reading was significantly less downbeat than that returned last month. Similarly, despite contributors reporting that new instructions coming onto the market continued to fall in May, it is noticeably less negative compared to the last reading. It is important to highlight that current activity metrics did not see any meaningful changes in Scotland, Northern Ireland and Wales, where restrictions on estate agents were not removed in May.”
Hometrack - “The reopening of the English housing market on 13th May led to a surge of pent-up demand returning to the sales market. In the week after the market reopened, demand jumped by 88% and is currently 20% higher than at the start of March.
“A short-term rebound in demand was to be expected, especially given how strongly the market started the year. While the scale of the recent increase in demand is high, it reflects the fact that the market has been closed for 50 days (15% of the year), at one of the busiest times for market activity.
“It is also important to acknowledge that millions of UK households have spent a considerable amount of time in their homes over the last 50 days. Many are likely to have re-evaluated what they want from their home and are looking for change. This could well explain the scale and speed of the demand returning to the market.
“However, it is hard to square the rebound in demand against projections for a sharp rise in unemployment and a major downturn in economic growth in the second half of 2020 and into 2021. We expect the economic impact of COVID-19 to feed through into market sentiment in the near term. We expect the recent spike in demand to be relatively short-lived, with demand likely to moderate over the coming weeks.
“The rebound in demand since the week commencing 11th May (compared to the average over February), is not uniform across cities. In countries where the housing market remains closed the rebound in demand has been weaker compared to cities in England.”
Knight Frank - “Demand is building and viewing levels are normalising as the market moves back towards its pre-lockdown state. In London, the number of new prospective buyers in the week ending 30th May was 35% above the five-year average. Viewing numbers narrowed to 34% below the five-year average after reaching their highest level since the second week of March.
“Meanwhile, outside the capital, the number of new prospective buyers in the same week was 5% below the five-year average, which compares to declines of 70%-plus during the lockdown period. The equivalent decline for viewings was 28%.
“In a sign that some buyers are targeting more outdoor space after the lockdown, web views were 8% above the five-year average for properties outside the capital. In London, there was a 13% decline. While demand has rebounded more quickly than supply since the lockdown, the balance is likely to be restored in coming weeks as more vendors list their properties for sale. The number of London-based buyers in the week to 23rd May was 28% higher than the five year average. Meanwhile, the number of instructions to sell remained 68% below the five-year average.”
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