Land Registry: weak supply drives monthly house price growth

The September data from the Land Registry shows a monthly house price increase of 1.0%.

Related topics:  Finance News
Rozi Jones
28th October 2015
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Annual price inflation reached a six month high in September, standing at 5.3% and bringing the average house price in England and Wales to £186,553.

However the number of property transactions has decreased over the last year. Between April and July sales volumes averaged 71,766 transactions compared to 78,330 per month in the same period a year earlier.

Jonathan Adams, director of prime central London estate agency Napier Watt, said that despite a modest monthly rise in the national average price in September, the number of property transactions suggests that "the market is perhaps not as healthy and functioning as well as it could be".

He added:

"The breakdown of transactions by price range is revealing, highlighting a fragmented market in London with higher-value properties struggling to sell. There were 288 £2m-plus purchases in July 2015, compared with 370 in the same month last year. But in the £1m to £1.5m range the number of transactions rose from 821 in July last year to 840 this year, underlining the impact the increase in stamp duty on purchases over £2m has had on the market."

Rob Weaver, Director of Investments at property crowdfunding platform Property Partner agreed, stating that "the 1% price rise seen in September was driven by one factor above all: weak supply".

He continued:
 
"The lack of property coming onto the market, coupled with the lack of new homes being built, is applying upward pressure on prices. Supply may have gone AWOL but demand is still very much there.
 
"This latest Land Registry data once again confirms how sales of properties valued at over £1.5m have fallen sharply following the introduction of a more punitive tax regime.
 
"But with annual price growth of 9.6%, even the capital is lagging behind Reading and Luton, which have grown by a massive 15.3% and 14.2% respectively over the past year. The message emerging from this data is once again, how can we improve supply? The market needs innovative solutions from both the Government and private sector alike."
 
John Eastgate, Sales and Marketing Director of OneSavings Bank, commented:

“House prices are bouncing back from what seemed like a moderating market, with annual price inflation reaching a six month high in September.
 
“Year on year price increases had slowed over the summer, so these numbers reverse that trend and as long as the scales remain heavily tipped toward demand over supply, continued growth is fairly certain in the long term. Little respite then for first time buyers, who struggle with the need to match higher house prices with larger deposits. Strong mortgage lending figures have so far been supported by year on year growth in remortgage activity, so this acceleration in house price inflation may yet further impact on the purchase market.”

Stephen Smith, Director, Legal & General Mortgage Club & Housing, added:

“A greater availability of mortgages due to low rates, low inflation and increasing wages has stimulated an increase in demand in the market. This would be good news if there were enough housing available for people to buy, unfortunately, however, this is not the case. The lack of properties coming on to the market is making the process of buying a home more competitive, which is in turn pushing up prices beyond the level of inflation and limiting the amount of choice for those looking to buy."

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