Slow December restricts annual house price growth

The latest LSL/Acadata house price index has shown that house prices for December remain effectively unchanged from the previous month, with the average price paid for a home in England & Wales at £279,000, just £40 above November's figures.

Related topics:  Finance News
Rozi Jones
9th January 2015
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It does however set another new peak average price for England & Wales, for the eighteenth month in succession, but only by the "narrowest of margins", according to Dr Peter Williams, housing market specialist and Chairman of Acadata.

The monthly rate of house price inflation peaked in January 2014 at 1.5%, but has been falling since then to reach the 0% growth recorded in December.

On an annual basis, average house prices in England & Wales rose by £24,380, or 9.6%, representing a decline of 1.0% from the 10.6% recorded last month.

The decline in growth is fuelled in large by prices in London & the South East cooling, as price growth across other regions remains steady. Greater London began the year with annual price rises at 10.9% in January, which rose to 20.4% in June before falling to 18.1% in November.

However despite annual growth retreating back into single figures, total home sales across 2014 rose 18% year-on-year.

Dr Peter Williams commented:

"Uncertainty is a strong theme and this is also reflected in views on house prices in 2015 with predictions at a national level ranging from a drop of 0.64% (CEBR) to an increase of 7.4% by the Office for Budget Responsibility – to quote but two.

"Much turns on the shape of the economic recovery and its distribution by region/country, the outcome of the General Election (or possibly two General Elections if no party can secure control in the first, even in a coalition) and whether any further interventions are made in terms of property taxation. The spread of published views give a clear sense that you can draw very different conclusions from the same data. Our task will be to track and assess the market as it unfolds."

Adrian Gill, director of Reeds Rains and Your Move estate agents, said:

“There was a brief interlude in the tempo of house price growth in December, with values pausing for breath after a chorus of uninterrupted monthly climbs since May 2013. On a monthly basis, property price inflation peaked last January, and has gently petered out over the course of the past year. This has pruned annual house price growth back to single digit territory again, recording a steadier 9.6% rise in average property values in England and Wales in the year ending December, down from 10.6% recorded in November.

“The recent Christmas chill has emanated from London and the South East. Typically, the South East pocket of the country has been out in front of the pack, but we’re seeing an about-turn. Property values in the capital and surrounding areas are beginning to concede ground after significant advancement over the last year. Average house prices dropped in a third of all London boroughs in the month to November, with Southwark experiencing the sharpest fall in average values of 3.1%.

“Monthly house price growth has continued if the exceptional London and South East regions are excluded from our calculations. Similarly, annual price rises across England and Wales are stable when these regions are omitted, as home values across the rest of the country stand firm and continue forward on their calmer trajectory.

“But it’s not just geography that disrupts the march of house price growth across England and Wales. It is the most expensive properties that are showing the strongest gains in value, while the rate of price growth is slowing among cheaper homes. Properties worth over £250,000 have seen average annual growth of 10.7%. But those valued below £153,000 have typically witnessed a year-on-year price increase of just 2.9%. As the two paths of growth diverge, this is widening the gap between the different rungs of the housing ladder.

“2014 was the year of the first-time buyer, with the second Help to Buy scheme parachuting further assistance to aspiring homeowners throughout the country, and ensuring that many potential buyers could still navigate around the stricter mortgage regulations and affordability checks, in the slipstream of higher LTV lending. During 2014 as a whole, completed house sales climbed 18% on 2013 levels – reaching the highest volume witnessed since 2007. While the bulk of this uplift happened in the first half of the year, 2014 finished at a sprint too – with completed house sales in December jumping 17% on the previous month, against the usual seasonal tide, as the Chancellor’s remodelling of the age-old stamp duty barrier flooded the market with buoyed consumer confidence.”

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