According to the numbers, the main contribution to the increase in UK house prices came from England, where house prices increased by 9.3% over the year to June 2016, with the average price in England now £229,000. Wales saw house prices increase by 4.9% over the latest 12 months to stand at £145,000. In Scotland, the average price increased by 4.6% over the year to stand at £143,000. The average price in Northern Ireland is currently £123,000.
London saw the highest average house price at £472,000, followed by the South East and the East of England, which stand at £309,000 and £270,000 respectively.
The East of England replaces London as the region which showed the highest annual growth, with prices increasing by 14.3% in the year to June 2016, compared to 12.6% in London.
Stuart Law, CEO at Assetz Property, had this to say: “Today’s data lays bare the impact of EU uncertainty on the property market, with house prices increasing at a slower rate than in May as a result of buyers and sellers either sitting on their hands in June or cutting a deal rather than waiting around for the result and its implications to become clear. July’s political turmoil probably means June was just the beginning of a summer price-rise slowdown, with inner-London taking actual price falls. We usually expect this inner-London slowdown to spread into the surrounding areas around the capital as the top end of the London market usually has a knock-on domino effect but given the special factors around inner-London over development recently perhaps this will be limited this time.
We shouldn’t get obsessed by house prices, however. Rents have remained relatively steady across the country, even with the huge surge of Buy-to-Let investment before the stamp duty deadline and investors can pick up high yield properties in the North for a fraction of the price of a London flat, with a reliable return that beats by far even the most generous bond or savings account. As interest rates and savings account rates have now fallen and could drop even further, buy to let mortgages are cheaper than ever and the urge is growing to invest somewhere rather than watch savings cash dwindle away under inflation.
The data shows that prices in the North West remained much more resilient at this time of economic change, with prices in Manchester for example increasing by 0.8% in the month and standing at a reasonable average of £149,721. With the market appearing much more resilient up North, we expect the 0.25% interest rate cut to encourage more investors to concentrate on investing for yields, particularly in the North where gross yields are reaching up to 8.5% on average.”
Russell Quirk, founder and CEO of eMoov.co.uk, says: “The latest data from the blended ONS and Land Reg indices shows no Brexit impact in June to the UK property market.
Nationally house prices are £17,000 higher than in June of last year and up more than £2,000 when compared to pre-Brexit. However, the two-month reporting lag of this particular indices means the drop in prices reported by Halifax at the start of the month is unlikely to come to the surface until July’s indices.
Regionally the capital is still king of UK house prices at £472,204 on average, but it’s interesting to see the East of England has overtaken London with the highest rate of annual growth of 14.3%, 1.7% higher than London.
This could be an early indicator of foreign investment fleeing the capital pre and post-Referendum result, although that said we’ve seen property demand in prime central London plummet to record lows over the last year. This is evidently becoming clear now in terms of property values with both Kensington and Chelsea and Hammersmith and Fulham both in the top five for the poorest performance in terms of annual growth, with values down 6.2% and 3.2% respectively.
Newham still flies the flag for London as the fourth highest local authority district in terms of annual growth, up 21.4% over the year. So the capital and the UK as a whole are still looking rather robust where the state of the property market is concerned.”
Randeesh Sandhu, CEO of Urban Exposure, said: “The UK housing market has been showing signs of weakening since Brexit was announced but it is by no means down and out. Today’s ONS data testifies the resilience of the housing market in the month of the Brexit vote and is a positive sign that some of the fears over the impact of Brexit on house prices have not come to fruition. Of course, the full effects of the UK’s vote to leave the EU are still to be revealed and this data must be viewed alongside more negative data we have this week from Rightmove for July to understand the full picture.
We retain a positive overall view on UK housing fundamentally based on enduring shortages in the supply of homes. Indeed, the recent RICS survey showed inventory on agents books around historic lows on average further exacerbating the long term issues around supply and demand. Today’s data suggests demand for housing is increasing, further underlining the continued need for more homes to be built more quickly.”
Andrew Bridges, managing director of Stirling Ackroyd, comments: “One thing is clear from today’s figures for June – despite a month of swelling uncertainty for the entire property market – hefty house prices are here to stay.
London is seeing unfaltering demand for homes, and overseas buyers are playing a crucial part in sustaining this momentum. Amid all the doubt and predictions in the last couple of months, London’s property market is still on a long-term upward trend, and prices are 12.6% higher than at the same time last year. The popularity of the capital leads to a premium buyers are ready to pay to secure a home – and a lack of new homes is pushing up prices even further. We may see the London market take a breath over the next few months, but make no mistake the trajectory is very much upwards unless tens of thousands more new homes can be built each year.
There’s now a £348,000 difference between the average home in London and in the North East – if London gets building this can begin to narrow. It’s buyers at the lower end of the market struggling the most, and as the real ripples of Brexit hit the surface over the next couple of months it’s these buyers who could be further priced out.”
Jonathan Hopper, managing director of the buying agents Garrington Property Finders, said: “June’s house price data was always likely to be a historical anomaly. The monthly totals lump together two very different property markets, pre- and post-referendum. The market was sluggish in the final weeks before the Brexit vote. In the days after it, it was punchdrunk.
The pre-referendum market portrayed by this anachronistic data – in which steady price rises were underpinned by strong demand and limited supply – is gone. The vote for Brexit plunged the market into a ‘hard reset’ in which both buyers and sellers took a step back and considered their positions. With demand and supply softening simultaneously, the market has entered unknown territory. There’s intent but precious little clarity. We’re seeing increasing numbers of standoffs between buyers who feel emboldened to ask for big discounts and sellers who are burying their heads in the sand.
It’s early days but all the signs are that we’re heading for a soft landing rather than a crash. With rock bottom interest rates and sentiment dominated by procrastination rather than panic, the big fall is in transactions rather than prices – giving the upper hand to buyers who are willing to work hard. Nearly two months on from the referendum result, it remains a case of Apocalypse Averted rather than Apocalypse Now.”
Patrick Bamford, Business Development Director for AmTrust International, Mortgage and Special Risks, said: “Today’s data shows a pre-Brexit bounce in house prices took annual property inflation to its highest point [8.7%] since October 2014, with the average price of a UK home now having risen for 17 successive months to a new peak of £213,927 in June.
The annual rate of change dwarfs the 0.6% rise in consumer prices over the last year, with first time buyers only marginally less affected than existing owner-occupiers [8.6% vs. 8.8%].¹ As the UK moves into the post-EU referendum era, it leaves a situation where aspiring homebuyers will be eager to see signs that access to mortgages remains strong and that the government can deliver on its commitment to boost the availability of new homes and ensure a better balance between supply and demand.
With homeownership struggles affecting cities and regions far beyond the confines of London and the South East*, it suggests the government needs to move beyond short term stimuli and towards a situation where greater housebuilding is coupled with long-term availability of mortgages with deposits at affordable levels. High loan-to-value loans are subject to increasing regulatory pressures which may limit lenders’ ability to serve this part of the market in future.
The new landscape for UK housing must include a permanent system whereby lenders can gain capital relief through the use of mortgage insurance in order to support homeownership while maintaining financial stability.”
Richard Connolly, Chief Executive Officer at Rentplus, comments on today’s UK House Price Index: “This latest data on the property market shows the continued house price growth across the UK in June 2016, with all regions seeing an annual increase in property prices. The monthly growth in prices across the nation was equal to £2,100 – near enough the equivalent of a month’s average salary. This is fantastic news for those who own their home already, who are seeing it work hard for them in terms of equity gain, but for the many people who are saving to get on the property ladder it is another indicator of lack of affordability and the continuation of the housing crisis. The ability to put up a deposit remains the biggest barrier to home ownership and, with real wages in the UK falling and low interest rates working against savvy savers, first-time buyers will find it increasingly difficult over the coming years to make the savings necessary to own their own home.
The new prime minister has pledged to tackle the housing crisis and we desperately need those promised 250,000 homes per year to be built. However, a one size fits all approach to the types of housing available won’t work and the government needs to accommodate innovative new housing models which increase access to home ownership and at the same time offer people security of tenure.
The strength of today’s house price data will increase the confidence of the residential construction industry in this post-Brexit period, but more needs to be done to escalate the scale of delivery to meet the challenges of affordability and a growing population. New market entrants which bring private institutional investment to the affordable housing sector now ought to be considered as a key part of the solution to the housing crisis, boosting the number of homes available for aspirant home owners.”
Andy Sommerville, Director of Search Acumen, said: “Today’s release by ONS and Land Registry has revealed a 1% growth in UK property prices in June and just a 0.2% increase in London. Although it appears the EU referendum may have had a negative impact on price growth in the short term, we should take stock after an 8.7% annual increase in prices as we’re already pushing the limits of affordability.
After soaring UK house prices throughout 2015, June’s modest growth could be a breath of fresh air to first time buyers and ‘second steppers’, who will be further helped by more attractive mortgage deals since the Bank of England rate cut. As economic confidence begins to return, the real problem could be a lack of supply if there is a late summer surge in new buyers.”
We must also remember that today’s data does not stem purely from the uncertain political landscape of the past few months, but instead represents longer term factors such as the buy-to-let and second home surcharges. Now could be the opportune moment for the government to think again on the stamp duty surcharge, or perhaps even introduce a stamp duty holiday for new build homes. It is essential that housebuilders have confidence in the market in order to boost investment in new sites and deliver more homes for the long term.”
