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 Homes Index.
This figure is roughly in line with the Land Registry year on year figure (5.6% to April 2017), but slightly above other leading indices year on year figures (Nationwide 2.1% to May 2017, Halifax 3.3% to May 2017, LSL Acadata 3.3% to March 2017).
The nature of new build housing makes price movements more difficult to track, but the slightly elevated figure could be a reflection of the relative scarcity of new build homes. 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 4.0% last year.
As noted in previous months, the picture seems to be of a slowing market in Greater London and South East regions whilst outlying regions enjoy some limited house price growth.
Last month the forthcoming election was expected to add certainty for businesses and in particular to cement the future direction for the housing market. But whilst all the main political parties agree on the need for more housing and particularly for more affordable housing, there are differences in their approaches and in their end games.
The outcome, in the form of the Queen’s speech, reaffirms the consensus view that more housing is needed, but it will now be more di cult to chart a course to create this. The February 2017 White Paper included proposals to build homes where people want to live, to build them quicker and to increase the number of house builders, but that does leave many unanswered questions.
Government data indicates that the median (number appearing in the middle) house price is now eight times the median earnings, which is an all-time record high. In the past ten or so years, home ownership in the 25 to 34 age bracket in England has fallen by 30% whilst the number of private renters in this group has nearly doubled.
The background document to the Queen’s speech says that nearly 190,000 net additional homes were delivered in 2015/16 in England which is the highest number since the peak of 2007. But this figure is still well short of the 225-275,000 new homes that sources agree are needed to create a momentum that meets the affordability challenge.
From a different perspective we can say that the target output of say 250,000 new homes a year represents a little over 1% of the total housing stock. So in reality other drivers such as sentiment, interest rates, inflation and economic activity will drive price changes as much as the new supply of housing.
And other reports are indicating that prices rises in London and the South East, where some of the greatest supply shortages are evident, are starting to run out of steam whilst demand in other regions remains relatively strong.