- March sees smallest annual change in house prices for sixteen months, at 5.6% (£14,620)
- Despite slower rises, average property prices across England and Wales set new record at £275,123
- Slowdown more prevalent in the south as London hit by higher stamp duty and threat of Mansion Tax
- Sales up 11.6% in March – but only half the typical monthly upswing expected at this time of year
- In the run-up to the General Election, sales are down 5% year-on-year in Q1
Adrian Gill, director of Reeds Rains estate agents, comments: “Property prices in England and Wales continue to hit new heights, yet the cogs of the machinery are flagging to the most laboured pace we’ve witnessed for sixteen months. Slowing to 5.6% in March 2015, annual house price growth has now been waning for half a year, and hasn’t been this sluggish since November 2013. But with homes on average worth £14,620 more than a year ago, it’s a far cry from anything worth lamenting from a bird’s eye view – even if people on the ground might feel somewhat differently. While price inflation simply isn’t as rapid as it was, the stamina is still strong, and prices edged forward another 0.2% in March.
“While house prices might still be on the up, sales appear to be treading water. Completed home sales in March 2015 totalled 72,200 – on the surface, this marks a strong 11.6% increase on February, but delving a little deeper reveals this is only half the uplift we would usually expect for the market at this typically animated time of year. Taking Q1 2015 as a whole, we’ve seen 5% fewer completed home sales than in the first quarter of last year.
“But this is far from a typical year. With the General Election tightening its tempo every week up until May 7th, cautious buyers are holding back to wait and see which way the chips fall. Property regulation is a hot topic in one of the most uncertain UK elections in a generation: no one wants to have the rug pulled from under their feet before they’ve made it through the front door.
“Examining the regional pattern of movement, it becomes apparent that we’re seeing less of a downturn than a convergence. The radical stamp duty overhaul has greatly boosted the prospects of buyers across the country, and injected new life into areas where prices have been stalled and the recovery is yet to show its face. But the small minority of those negatively affected by the restructuring of the old slab system are disproportionately concentrated in the more expensive, southern regions of England. Naturally, London has been the hardest hit at the sharp end of this reform, and also most directly threatened by future mansion tax, possessing the lion’s share of high-end property, and the clustering of properties in the million pound price bracket mirrors the locations where price rises have cooled most quickly. Between January and February, the South West has seen annual house price rises fall back by 1.1 percentage points from 5.5% to 4.4% – the most marked slowdown across England and Wales, and closely followed by London and the South East, which both experienced downtrends to the tune of 0.9 percentage points. While values in London and the South West are no longer at their peak, the East and West Midlands and East of England are instead among those setting new price records in February.
“For so long, London has been the workhorse dragging up overall measures of UK house price growth, but we’ve reached a new equilibrium. While house price growth is more measured than it was a year ago, it’s also far more evenly distributed across the country, with London having the most negligible impact on barometers of house price growth for three years. The difference between annual growth including and excluding the capital is now only 0.7%, the smallest gap since March 2012. Striking this fairer balance between London and the rest of the country is only good news for the long-term sustainability of the housing market recovery.”
Full details about the March 2015 House Price Index can be found here