House price growth slows down

House price growth slows down

Annual house price inflation gathered momentum in January increasing to 6.2 per cent across the UK, according the government's house price index.  

The increase was 0.5 percentage points higher than house price inflation in December 2016 but was still below the average annual house price growth seen in 2016, which was 7.4 per cent.

House price inflation was greatest in the east of England at 9.4 per cent, south east at 8.7 per cent, south west at 7.4 percent and London at 7.3 per cent.

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The lowest increases were in the Yorkshire/Humber region at 2.7 per cent, the north east at 2.2 per cent and Scotland at 4 per cent.

The increase put the average price of a property in the UK at £218,255 with prices increasing at 0.8 per cent a month.

The Land Registry said moderate demand continued to outmatch supply and the overall level of transactions is falling.

It noted that Bank of England approvals for lending secured on dwellings for January 2017 showed the volume of approvals for house purchase decreased by 3.9 per cent compared with January 2016. 

ONS Construction output in December 2016 reported total new housing was 6.7 per cent greater than in December 2015 but advisers say supply is still not keeping up with demand. 

Michelle Lawson, director at Lawson Financial, called for a tax break or incentive to regenerate properties that are currently empty.

"New homes are important but so is the maintenance and upkeep of current housing stock and will help stop certain areas being neglected in favour of new developments," she said. "Existing communities are equally as important as new ones." 

While James Carter, principal at Independent James, said: "It is the same old story of constrained supply propping up demand and prices.  A lot of the new build properties are not suitable for families." 

Jeremy Duncombe, director at Legal & General Mortgage Club, said for the time being the housing shortage would worsen.

"Despite record low interest rates, the latest ONS figures show that average house prices in England and Wales have now reached 7.6 times more than average earnings.

He said: "This gap is only going to widen if prices continue to follow this trend, preventing many from taking their first steps onto the property ladder."