In the year to end September 2017 new build house prices rose on average by 5.2% across the UK, down on last year’s figure of 5.8%, according to the LSL New Homes Index.
If Greater London is taken out of the calculation, the average house price growth is 4.2% which is unchanged on last year’s figure.
Some other indices are pointing to lower and even negative price changes in London but it is likely that the geographical distribution of new build property may account for this difference. “In common with other indices, we are seeing a spreading of the ripple effect as the Southern half of the country starts to see slower price rises whilst there is more growth in the North,” the LSL New Homes Index said. “But the gradual decline in household incomes and general economic uncertainty seem to be creating a cautious environment. Even the prospect of continuing low interest rates is not generating buyer activity at anything like the levels seen in the run up to the market crash a decade since.
“Perhaps the most important change for housebuilders over the past month has been the extension of the Help to Buy scheme. It was initially supposed to end in January of this year but has now been extended to at least 2021 with a further £10 billion injection being made from the government.”
On a more positive note, wage growth is now over 2% and unemployment continues to fall to new lows. The Base Rate remains at 0.25% but there is increasing likelihood that this will increase in the near term.
Projections are for housing starts to be generally flat over the next year but the continuation of Help to Buy, which is estimated to have helped 185,000 first time buyers get on the housing ladder, adds some certainty to the outlook.
The latest government data on residential transaction indicates that volumes were over 6% up on the same period last year and roughly unchanged from the same period in 2015. As always the only thing we can say about the future is that it is uncertain, but the housebuilding industry seems to be managing this uncertainty well.