According to the latest data, the price of new builds has rocketed as Help to Buy has elevated demand above that of existing property.
House price indexes generally made happy reading in August 2017, suggesting an uptick in activity and prices, albeit with growth concentrated in areas outside London. However, the new build sector appears to have shown the most resilience to political uncertainty and constrained consumer spending.
According to land registry data, the average price of a new build now stands at £304,045. Although this is 1.7% down on June prices, it represents a 17.7% increase on year ago levels. By comparison, the price of existing resold property remained relatively static at £221,270, just 4.3% higher than in June 2016.
The Bank of England’s agents’ summary of business conditions for August 2017 reported that the market for new homes remained stronger overall than the secondary market, supported by Help to Buy.
According to the land registry figures, UK house prices overall grew by 5.1% in the year to July 2017 while Halifax reported that prices have edged up for the first time since March. RICS reported solid price growth in many regions, including Northern Ireland, North West, South West and Scotland. In its latest survey, 6% more respondents reported prices rising rather than falling at the headline level.
“The annual rate of growth increased from 2.1% in July to 2.6% in August with the average house price now £222,293, which is just above the previous high of December 2016,” said Russell Galley, Managing Director, Halifax Community Bank. “Recent figures for mortgage approvals suggest some buoyancy may be returning, possibly on the back of strong recent employment growth, with the unemployment rate falling to a 42-year low.
“However, wage growth is still lagging increases in consumer prices, which is likely to add pressure on household finances and increase affordability challenges for some buyers. House prices should continue to be supported by low mortgage rates and a continuing shortage of properties for sale over the coming months.”
However, data does suggest a mixed regional picture; according to the RICS survey, 56% more respondents in Central London have seen a fall in prices, posting the weakest result since 2008. RICS also reported that national sales have not seen any growth since November 2016.
According to land registry data, the highest annual growth was in the East Midlands (7.5%) while the slowest annual growth was in London (2.8%). This is the eighth consecutive month when house price growth in London has remained below the UK average.
“The latest results continue to suggest that the greatest pressure on both prices and activity continues to be felt in prime central London market,” said Simon Rubinsohn, RICS Chief Economist. “Although there are some signs that the wider South East is also losing some momentum, anecdotal evidence suggests the impact is very location specific. Meanwhile, the numbers for most other parts of the country point to a rather more resilient marketplace.”