TH: House prices grow at slowest rate in four years
House prices are growing at their slowest rate for four years according to the latest index from the country's biggest mortgage lender, reports the BBC.
Halifax's house price index for March puts the annual rate of growth at 3.8 per cent, down from 5.1 per cent for the year to February and the slowest rate since May 2013.
On a monthly basis, the index has shown zero growth for both of the last two months, while the rolling three-monthly data, which the lender prefers, rose just 0.1 per cent in March.
A rival index from Nationwide last week suggested house prices rose by 3.5 per cent in the year to last month, but it recorded a modestly negative month-on-month growth figure for the first time in two years.
An average home in the UK is now worth ¬£219,755, says Halifax.
Experts argue that affordability constraints after years of rapid house price acceleration, coupled with headwinds from Brexit and a crackdown on buy-to-let landlords, is slowing the housing market.
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But there is also consensus that a shortage of homes for sale is underpinning the market and that growth will remain positive.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, told The Independent he expects house prices to increase by just two per cent this year.
A study by the Centre for Economics and Buyout Research this week predicted values will rise by four per cent this year - and by ¬£60,000 from the end of last year to 2021.
However, those figures are based on Office for National Statistics data which typically records a faster rate of growth and represents a slowdown from 7.5 per cent last year.
House prices forecast to rise ¬£60,000 in next four years
Perfect storm of housing shortage and cheap mortgages predicted to trump Brexit and buy-to-let tax hike
House price growth is set to slow over the next few years, but the average property will still be worth ¬£61,000 more by 2021 despite the headwind of Brexit and big buy-to-let tax increases, says a new report.
According to the Centre for Economic and Buyout Research (CEBR), house prices will grow 4.4 per cent, or ¬£9,000, this year, rising from ¬£211,000 to ¬£220,000, reports the Daily Telegraph.
This would be a marked slowdown from the 7.5 per cent for 2016, as tracked by the Office for National Statistics, while next year is expected to see growth slide further to 4.1 per cent.
But for the following three years, the growth rate will accelerate to 5.7 per cent and then beyond six per cent. By 2021, the average house price will be ¬£272,000, says CEBR.
These figures will sound high to those who have been following private sector house price indices from the likes of Halifax, while Nationwide yesterday said prices rose by just 3.5 per cent in the year to last month.
The trend is the same, however, with house prices coming off rapid growth rates of recent years, but remaining in positive territory. Many believe that by private sector measures, growth will slow to around two per cent this year.
It had been widely predicted that Brexit would cause a prolonged correction for house prices, sending them into negative growth.
Added to that is the latest leg of the buy-to-let clampdown, which starts with a new tax year today and means that by the end of this parliament, higher-rate taxpayers will be able to deduct only half of the tax on mortgage interest they can deduct at the moment.
However, says the Telegraph, offsetting this is an ongoing shortage of homes, with the CEBR reporting that 40 per cent of councils do not know how they will meet housing demand over the next decade.
"By other measures the market is proving buoyant," adds the paper, with the number of mortgages issued running close to pre-crisis highs and low interest rates keeping borrowing cheap.
London house prices drop out of global top 50 for growth
The tide appears to be turning for London house prices, which until early last year were among the fastest-growing - and most unaffordable - in the world.
After being ranked the world's number 14 for house price growth in the first three months of 2016, the capital dropped to 55th place, according to estate agent Knight Frank's global index, reports City AM.
A UBS study last year also ranked London as the second most unaffordable place to buy a home of any city in the world.
Since then, however, an increase in stamp duty on second homes and the Brexit vote have taken some of the heat out of the market.
For the three months at the end of last year, Knight Frank estimates London registered price growth of 7.5 per cent.
Three UK cities posted faster increases: Bristol (38th with growth of 10.1 per cent); Manchester (51st, 7.9 per cent), and Birmingham (53rd, 7.7 per cent).
London house prices have also slowed considerably since then. Hometrack's latest index found the capital's growth rate fell to 5.3 per cent for the year to February, below the UK cities average.
March's wider house prices went into reverse on a month-on-month basis for the first time in two years, says Nationwide, while the annual rate slipped to 3.5 per cent.
Overall, analysts expect the market to continue to slow this year but to remain positive with growth of two per cent. London, which is already at the top end of affordability, could fare worse.
House prices see 'abrupt reversal' in momentum
An "abrupt reversal in momentum" in house prices in the past month should act as a "wake-up call" to the market, according to one expert following the publication of Nationwide's latest monthly index.
Based on the building society's own lending activity, March's house prices fell month-on-month for the first time in two years, dropping 0.3 per cent.
Jonathan Hopper, managing director of Garrington Property Finders, said: "Whether you regard it as a dive or just a dip, March's abrupt reversal in house price momentum is a wake-up call."
All of the lenders that produce similar data say monthly changes can be volatile and to look instead at the likes of the rolling annual growth figure, which fell one per cent to a 19-month low of 3.5 per cent.
Since last year, various indices have also been tracking a decline in housing transactions, as a stamp duty hike for would-be landlords is deterring buy-to-let investors and the Brexit vote hits appetite from oversea buyers.
Several experts believe general affordability constraints following years of rapid price growth have also been weighing on demand for some time.
Nationwide pointed to figures that appear to corroborate this and that show home ownership at its lowest level since 1985 of 63 per cent, says The Guardian.
Overall, most analysts believe growth will remain positive this year due to a dearth of supply, but that the pace at which prices are picking up will slow.
Hopper said average prices would "continue to creep up" at a "subdued pace", while Howard Archer, UK chief at IHS Markit, said: "Markedly weakening consumer fundamentals, likely mounting caution over making major spending decisions, and elevated house price to earnings ratios are likely to weigh down on housing market activity and house prices.
"However, a shortage of supply is likely to put a floor under prices. Consequently, we believe house price gains over 2017 will be limited to around 2.5%."
How will the triggering of Article 50 affect house prices?
According to the Financial Times, in the week that Article 50 has been triggered, the most searched Google term following the phrase "How will Brexit affect‚Ä¶" is house prices.
There is widespread concern that the economic fallout from the UK leaving the EU could undermine housing confidence.
So far, the FT says, that is how things are playing out: HMRC figures show transaction levels in the second half of 2016, after the Brexit vote, were down nine per cent on the same period in 2015.
In general, anecdotal evidence says a slowdown in foreign buyers in high-value markets such as London has added to a reduction in prospective landlords moving into the market following the rise in stamp duty last April.
The capital has apparently been hardest hit, with some indices citing negative growth overall, dragged lower by the most expensive boroughs.
But other studies show growth continuing. Hometrack featured London house prices rising 5.3 per cent year-on-year last month, the lowest figure since May 2013 but still steady and positive.
This is the story in recent months: slower transaction volumes and declining growth, but house prices still edging steadily higher.
Experts predict growth across the UK this year could fall to around two per cent.
The main reason prices are continuing to rise, albeit slower, is the ongoing shortage of housing, which means demand being propped up by low interest rates is outstripping supply.
It is possible the Brexit process could lead to a sharp drop in economic confidence that would upset the apple cart, but otherwise this trend looks set to continue.
‚ÄčLucian Cook, head of residential research at Savills estate agents, told the London Evening Standard: "[Brexit] may well make the Bank of England reluctant to increase interest rates, despite the recent increase in inflation.
"This will preserve affordability and points to a low turnover market, with little upward or downward pressure on prices."
House prices force more first-time buyers to tap 'bank of mum and dad'
High house prices across the UK are forcing young first-time buyers to seek financial help from their parents to get on the housing ladder.
A report from the, which is chaired by former Labour minister Alan Milburn, found 34 per cent of people getting on the property ladder looked to the "bank of mum and dad" for help towards their deposit in 2013/2014, the latest data available.
It's the highest figure on record, says City AM, and up sharply from just 20 per cent in 2010.
There is also a longer-term trend of young families being priced out of the market: in 1990, 39 per cent of 20-24 year olds bought their own home compared to ten per cent by 2015.
At the same time, the proportion of 25-29-year-old homeowners dropped from 63 per cent to 31 per cent, says The Guardian.
House prices have soared by hundreds of percentage points over the last few decades. After a sharp dip in the wake of the financial crisis, rapid growth resumed in 2013 and continued into the middle of last year.
While this slowed after the Brexit vote, all house price indices show values defying declining activity levels and creeping higher due to a dire shortage of available property.
However, wages have failed to keep pace. Average earnings from 2011 to 2016 grew by nine per cent, but the average house price soared by 26.7 per cent, said a study based on Office for National Statistics data last week.
Consequently, the number of years' earnings required to afford the average home has increased from eight to more than nine.
The Social Mobility Commission says the increasing prevalence of parents in their children's purchasing power entrenches inequality as only those who already have a level of wealth are able to help.
Last year, the commission called for the government to "build three million homes over the next decade and build on the green belt", says the Guardian.
On current trends, parents will be helping with 40 per cent of transactions by 2029, adds the report.