In the year to end January 2017 new build house prices rose on average by 5.8% across the UK, a drop from last year’s figure of 7.2%, according to the LSL Land & New Homes Index. However, if Greater London is taken out of the calculation, then the average house price growth is 4.4% compared to a figure of 4.1% last year.
LSL Land & New Homes said, “Looking across the regions it can be seen that the overall change in the growth rate is the result of some strengthening at the bottom end and midrange of the regional performance table and weakening at the top end. It is very interesting to note that in the year to end January 2016 four of the 11 regions tracked were showing price growth of over 5%; in the year to end January 2017 six of the regions (more than half) were showing price growth of over 5%.”
In the year to end January 2016, Greater London had been knocked off the pole position by East Anglia and was coming under threat from the South East. However, over the past year Greater London has regained its pole position with growth of 9.4%; the South East takes equal second position along with the East Midlands at 7.3%.
There then follows a number of regions showing respectable growth levels (being well over double RPI inflation). The South West 5.6%, Wales 5.3% (up from just 1.5% last year), the North West 5.2% and East Anglia 4.8% all have growth in the 5% band. Yorkshire & the Humber 3.2%, the West Midlands 2.1% and Scotland 2% are now into above RPI in ation growth and only the North East at 0.7% does not achieve this level of growth.
LSL Land & New Homes said, “UK economic growth for 2016 has been better than anticipated but projections are for a slight slow-down in 2017, which is yet to materialise. The above evidence of a growing ripple effect in the housing markets across the regions may not yet be factored in, as housing market sentiment is known to effect consumer behaviour. Evidence of house price growth in the regions may well be self-reinforcing and carry these markets onto further growth.
“One of the biggest impacts on house builders from the recent Housing White Paper is the proposal to let councils issue completion notices, requiring developers to start building in two years as oppose to three, once planning permission has been granted.
“They are also encouraging small builders into the market place through the Home Building Fund (presently 60% of new homes are completed by 10 companies) and encouraging urban regeneration. There is also an ongoing focus on affordable housing with more build to rent and affordable rent being in the mix.
“How will the new homes industry manage these additional constraints? If the regional market is picking up then it may be possible to sell more units, but whether the skilled labour force is there to build them is another issue.”