In the year to end June 2017 new build house prices rose on average by 5.4% across the UK, marginally down on last year’s figure of 5.6%, according to the LSL New Build Index.
The figure is roughly in line with the recently published ONS figure for the year to May 2017, which was 4.7%. The strongest house price growth remains focused in the South and East of the country, but all regions are showing price growth to a greater or lesser degree. If Greater London is taken out of the calculation and we take a crude average of the remaining regions, then the average house price growth is 4.3% compared to a figure of 3.9% last year.
Amongst others, the RICS UK Residential Market Survey for June 2017, points to a loss of momentum in the market with a slowdown in the various indicators of market sentiment and activity that it tracks. It seems that political and economic uncertainty along with
recent measures against the residential investor sector are leading people to hold back from making a major financial commitment or put another way, entering the housing market.
Of course economic and political uncertainty are not desirable conditions either for house builders to make multi million pound investments in new and speculative housing projects.
The NHBC has recently reported that there were 14,680 new homes registered in the UK in May 2017 which is 16% up on last May’s figure. The main growth is however in the number of units being built for the affordable sector, which is up around 30% on the same quarter last year.
Comments made in the latest HMR&C UK Property Transaction Statistics, highlight the problems around trying to work out which way the market is heading. A little over a year since the Bank of England brought in measures to curb buy to let, leading to a rush to buy before April 2016, so bringing purchasing activity forward.
So it is not easy to compare last year with this year. Buyer sentiment is of course critical when making big decisions and the General Election and Brexit have both added uncertainty to these decisions which also alters buyer behaviour. Added to that is the general ticking up of inflation, which is making people feel poorer, and the daily feed of mixed economic news.
Buyer sentiment has always been the great unknown driving the housing market and it seems that it is now more so than ever. In these circumstances it is perhaps not surprising that the share of affordable sector is growing as this offers a less risky way onto the housing ladder. Similarly, it might be that house builders will need to start thinking about part exchange as a means to encourage buyers to commit to a purchase.