By According to the Office for National Statistics ONS, UK house prices rose by 3.5 per cent in the year to September 2018. This has increased by 3.1 per cent since August and has taken the average UK house price to £233,000.
These new ONS figures follow a two-year slowdown in UK house prices after a two year period in house price growth, which was felt more keenly in the South and East of England according to ONS data.
London saw house prices fall by 0.3 per cent over the year to September, but this latest house price figure is a slight improvement from the 0.6 per cent fall in the year to August 2018.
Non-seasonally adjusted average house prices across the UK were unchanged between August to September this year, compared to a 0.4 per cent decrease in average house prices for the same period in 2017.
House prices in England saw the slowest growth when compared to Northern Ireland, Scotland and Wales, which increased by just 3 per cent in the year to September 2018. However, this is an increase from the same period in 2017 which was 2.8 per cent. The average house price recorded in England in September 2018 was £249,000.
House prices in Northern Ireland increased over the year to September 2018 by 4.8 per cent and the average house price in Northern Ireland was recorded at £135,000. Scotland saw the average house price increase by 5.8 per cent which was recorded at £153,000. And the average house price in Wales also increased by 5.8 per cent, raising the average house price to £162,000.
Post Office Money’s Chrysanthy Pispinis, commented on the ONS results saying, “House price growth is slowing across the UK, particularly in the South; a trend we expect to continue while the market remains uncertain. This slowdown presents a window of opportunity for first-time buyers as changes made such as tax incentives and product innovations have supported more buyers to enter the market; in the last year alone for instance, we’ve seen successful FTBs increase by 12%.”
“Increased housing supply, which has supported affordability and more ‘deposit-free’ mortgage options, has helped one in 10 new buyers to get on the ladder. Other changes, such as the abolition of stamp duty for properties up to £300,000, have helped the average FTB save over £2,000.”
“These savings can make a huge difference to FTBs’ ability to effectively plan and budget for the full costs associated with moving, which are often underestimated by 80% of buyers.”
A closer look at the Capital, the South and the East
The recent ONS House Price Index data for September 2018 showed that London has the highest house prices compared to any other area in the UK with the average house price recorded at £482,000. This is closely followed by the East of England which reported prices at £294,000 and the South East where the average house price was recorded at £328,000.
However, in London, average house prices fell by 0.3 per cent over the year to September since March 2018.
ONS data shows that there is a variation between house price growth across the London boroughs and that the recent negative house price growth seen primarily in inner London boroughs where house price growth has been consistently low since January this year.
House price growth in outer London has still remained positive over the year to September 2018, despite remaining low. Changes in house price growth in outer London will tend to be felt following changes taking place in inner London according to the ONS data, as both inner and outer London can be seen to follow similar trends in house price growth.
According to the Bank of England’s November Inflation Report, the slowdown in London’s house price growth is probably attributed to the area being particularly and disproportionately affected by regulatory tax changes, alongside a decrease in net migration from the EU.
When comparing the recent ONS data for the rest of England, the area which had the lowest recorded average house price was the North East, at just £132,000. However, this region is the only one in the country to have exceeded its pre-economic downturn peak.
House price growth in Scotland
Scotland saw house prices increase in 27 out of 32 local authority areas over the last year, and the largest house price increase was recorded in West Dunbartonshire, which saw the average house price reach £110,000, a staggering increase of 11.9 per cent.
Aberdeen house process, on the other hand, dipped 4.4 per cent, resulting in the average house price decreasing to £161,000.
On a seasonally adjusted basis, average house prices in Scotland increased between August and September 2018 by 0.6 per cent. However, when comparing this data to non-seasonally adjusted figures, the average house prices fell by 0.1 per cent in the August to September. Ultimately this year’s average house prices have proven to be better compared the same period in 2017, which saw a decrease of 1.8 per cent.
On the whole, according to the ONS data, although Scottish house prices fell month on month by 0.1 per cent, there was an annual increase of 5.8 per cent in September, which is an increase of 4 per cent when compared to August 2018. This demonstrates that Scottish house prices were growing at a faster rate compared to the rest of the UK’s reported annual rate of 3.5 per cent in the year to September 2018.
House price growth in Wales
According to the recently published data from ONS, Wales saw a month on month increase in average house prices of 0.5 per cent between August and September. The annual rate of average house price growth increased in Wales by 5.5 per cent in the year to August 2018 and Welsh house prices were recorded as outpacing the UK’s annual rate of 3.5 per cent in the year to date.
The recorded average house prices in September 2018 have increased across 20 out of 22 local authority areas across Wales, according to the ONS data. Both Monmouthshire and Newport saw the steadiest growth in house prices in the year to September, as Monmouthshire saw a 10 per cent increase to £266,000 and Newport saw an 11 per cent increase to £179,000.
On a seasonally adjusted basis, Welsh average house prices recorded an 0.8 per cent increase between August and September 2018. Whereas the non-seasonally adjusted average house prices increased by 0.5 per cent between August and September this year, when compared to the same period in 2017 which saw a 0.2 per cent increase.
According to the Bank of England’s November Inflation Report 2018, the UK’s house price inflation has slowed since the beginning of 2016. This has been attributed to a number of factors, such as Brexit uncertainty, and it has been largely felt in London and the South East of England.
In London, house price inflation was stronger in the period from 2014 to early 2016, which put average house prices above income growth, impacting affordability. However, the recent slowing in London’s house price inflation growth has since brought house prices back to levels relative to income in some areas. Overall, UK house price inflation is predicted to remain modest in the short-term.
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