As such, house price inflation has now quickened in each of the last seven months following a sustained period of easing towards the latter half of 2014. In net balance terms, the strongest growth came in East Anglia, Northern Ireland and Yorkshire & Humberside, although the vast majority of areas are seeing firm price momentum, according to the data.
The latest LSL house price index, released today, also shows that average house prices across England and Wales jumped £1,900 in August – the fastest rise seen for past twelve months. This takes property values to eighth peak this year, standing at £282,816 after a 4.1% annual increase.
The index also found that overall home sales have fallen behind 2013 levels for the first time this year, following a 14% monthly drop.
The RICS survey showed that new vendor listings declined for the seventh consecutive month, albeit the pace of decline did ease moderately. Nevertheless, new instructions have yet to record any meaningful uptick since the middle of 2013, pushing average stock levels to record lows.
With supply remaining tight, agreed sales showed only a modest increase for the fourth consecutive month. However, regional movements vary considerably from the national sales picture. The West Midlands, the North and the South West all posted solid growth in transactions, while East Anglia and the North West were reported to have seen a drop in sales volumes. Looking ahead, all areas of the UK are expected to chalk up significant sales growth over the next twelve months, with the outlook particularly upbeat in Wales and Scotland.
Largely unmoved from last month, 68% of RICS respondents continue to deem current market valuations to be either at or below fair value nationally. Nonetheless, perceptions in East Anglia, London and the South East differ quite significantly, with over 50% of contributors feeling residential property is somewhat overpriced in each of these localities. At the other end of the spectrum, Northern Ireland, Scotland and East Midlands have the highest proportion of respondents perceiving prices to be around fair value, or below, at present.
Adrian Gill, director of Reeds Rains and Your Move estate agents, commented: “House price growth now firmly has the bit between its teeth, and August witnessed the strongest monthly boost for a year. Average property values across England and Wales have jumped 0.7% (equal to £1,876) since July, which is the biggest monthly increase seen since August 2014. So far in 2015, monthly price rises had struggled to break above the 0.5%, so this clearly marks a step up in pace, as a shortfall of summer sellers puts buyers in hot contention for properties.
More importantly, all ten regions of England and Wales are showing annual increases in house prices – the last region to experience a year-on-year fall in property values was Wales in July 2013.
Home sales across England and Wales reached 76,700 in August, down 14% on July levels. This should be taken with a pinch a salt – July was an exceptionally strong month for transactions, and activity in August can be seen as balancing this out. But August is also the first time in 2015 to date that property sales have fallen below their equivalent month in 2013. In the three months to July 2015, property sales have dropped 3% year-on-year. Across all of England and Wales, the North is the only region where activity has increased over the period, with home sales up 3% during May to July 2015 compared to the same three months in 2014.
The nationwide mismatch between sellers putting homes up for sale and buyer demand should warm up measures of growth for the autumn. August represented the twelfth month in succession that the annual rate of growth declined – down steadily from 11.1% in August 2014, to 4.1% last month. But encouragingly, we’re seeing this downtrend start to level-off now, suggesting that the annual rate of price rises may start to pick-up again soon, driven by the strengthening monthly improvements that are emerging.
Property price growth in London has been waning most notably recently, but this appears to be following a similar pattern to the nationwide trend, and after bottoming out, we are beginning to see signs that house prices in the capital are starting to gee up. Once again, London and the South East are boosting our overall measures of average annual change for England and Wales as a whole.”
Andy Sommerville, Director of Search Acumen, comments: “Agreed sales are chugging away according to the latest RICS data, but speculation around property price hikes is a reminder of the stark gap between pent-up buyer demand and availability of housing stock.
House prices are showing no signs of abating, and the glaring supply shortage desperately needs to be addressed. The reported rise in tenant demand over and above landlord instructions shows the private rental sector is also suffering a squeeze on capacity. The government’s promise of more brownfield development and extra homes is a step in the right direction, but the pledge to deliver 275,000 extra houses by 2020 won’t come close to closing the gap.
For now, rising prices have not dampened interest or buyer enquiries, which means conveyancers can expect fierce competition in the market for the remainder of the year. It looks like being a busy end to the year, so it’s vital that business systems and processes are set up to deliver a quality service offering that exceeds expectations.”
