House prices: Low growth in July as fifty-plus homeowners stay put for longer

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According to latest data from the Nationwide, the average house prices increased by just 0.5 per cent annually, with the average UK property price now standing at £217,663. Of course, this doesn’t account for regional variances and price differences between the main conurbations in the UK, where average house values can and do vary greatly. Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “Annual house price growth remained below one percent for the eighth month in a row in July. “While house price growth has remained fairly stable, there have been mixed signals from the property market in recent months.” 

Robert continued: “Surveyors report that new buyer enquiries have increased a little, though key consumer confidence indicators remain subdued.

“Data on the number of property transactions points to a slowdown in activity, though the number of mortgages approved for house purchase has remained broadly stable.”

Generally speaking, the overall number of homes changing hands has been reasonably steady for the last few years, with the number of properties sold equivalent to around five percent of the total number of residential properties in the UK. 

This is higher than the number of transactions seen when the market was at its lowest in 2009, but it’s still significantly below the number homes that were bought and sold before the financial crisis.

So, what could be causing the slowdown in the number of transactions?

Aside from the obvious rise in house prices and affordability challenges around obtaining a mortgage, today’s Nationwide report suggests that changing homeowner behaviour is playing a significant part as well.

Robert explained: “The declining proportion of younger owner occupiers may also be impacting home mover activity, as younger households tend to move more frequently.

“For example, for those aged 35 to 44 owning with a mortgage, the average length of time in their current property is 6.8 years, while for those aged 55 to 64 it is 17.2 years.”

This highlights that more established homeowners are now staying put for much longer, which Robert Gardner attributes to the ongoing lack of properties on the market “likely to be a factor.”

He added: “This has led to a less liquid market, which may be deterring some potential home movers from trying to sell their own properties, a trend which becomes self-reinforcing.”

Mike Scott, Chief Property Analyst at estate agency Yopa suggested there is unlikely to be much change in the near future, and said: “We expect that the rate of house price growth will stay low but stable for at least the rest of this year, since the fundamentals remain strong with low unemployment, rising real wages, low mortgage interest rates and good mortgage availability.

“The outlook for 2020 and beyond will depend on a return to political and economic stability once the first phase of the Brexit process has been completed.”

Sam Mitchell, CEO of online estate agent Housesimple observed: “With a new occupier in at Number 10 it will be interesting to see what changes lie ahead to support buyers and sellers.

“There have been a number of ideas thrown about, with one suggestion being to move the burden of stamp duty from buyers to sellers. Whatever changes are made, the new PM needs to act quickly to avoid uncertainty, which could leave buyers and sellers alike sitting on their hands anticipating a change.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, agreed, and said: “One of the reasons for the lack of activity is clearly political uncertainty, but there is no doubt that talk of changes to stamp duty is also weighing on perspective sellers’ minds.” 

All of which goes to underscore that stamp duty reform could give the market a substantial boost in the months ahead. But only if the new government takes swift and decisive action.

Follow Louisa on Twitter: @louisafletcher

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