House price growth slows to 10-month low, but promising year ahead

Data from LSL Property Services / Acadata reveals that UK house prices edged up 0.3 per cent in January 2015 compared to December 2014. The average house price is now £277,857, 7.5 per cent higher than the same month last year. The annual growth, though, is the smallest yearly improvement recorded for 10 months, says Adrian Gill, director of Reeds Rains and Your Move estate agents.

“After some recent price falls, average property values haven’t taken any steps forward from where they stood in November – and what we’re seeing is a far cry from the marathon of monthly increases that set off this time last year,” he comments.

Indeed, in a reversal of fortune, London is leading this slowdown.

“The capital has long been the propeller driving forward growth, but after cruising ahead at full speed in 2014, the London property market has run aground momentarily,” continues Gill. “Average London house prices experienced the biggest drop during December (1.1 per cent), but this is just a symptom of the unsustainable rate of growth that the market stretched to last year, as the capital now takes a pause. While a prospective Mansion Tax and higher rate of Stamp Duty on million pound homes may be a blot on the buying landscape at the top end, everyday buyers are simply able to take their time to deliberate and get their finances in order now that market conditions have rationalised again.”

Nonetheless, demand is “vibrant” at the bottom rungs of the ladder, while the balance between sellers and buyers is healthier than last year.

“The London story acts as a miniature model of what’s happening in the rest of the UK housing market,” explains Gill. “The market is temporarily treading water at the higher end, but fast-moving in areas where price growth has been more modest, and where cheaper properties are within reach of new buyers and borrowers who can access Help to Buy. For instance, when you exclude the colossal London and the South East from the equation, the slowdown in annual price growth is much shallower, as growth across other parts of the country continue to sail along steadily.”

With Stamp Duty savings now sweetening the deal and low mortgage rates fostering a host of competitive long-term fixes, homeownership is spreading its wings and breeding further confidence in the market, argues the report.

“All in all,” concludes Gill, “it’s a promising start to the New Year.”

 

Photo:  SarfLondonDunc

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