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House Prices Rise but Activity Remains Subdued

The latest UK House Price Index has revealed that average house prices in the UK increased by 5.0% in the year to August 2017 (up from 4.5% in July 2017). According to the Office for National Statistics, which published the Index, the annual growth rate has slowed since mid-2016 but has remained broadly under 5% during 2017.

Average House Prices

In August, the average UK house price was £226,000, which is £11,000 higher than in August 2016 and £1,000 higher than last month.

The main driver for the increase in average house prices across the UK was apparently England, where house prices increased by 5.3% over the year to August 2017, taking the average price to £244,000.

However, the other three UK countries also saw their average house prices increase over the past twelve months. In Wales, the increase amounted to 3.4%, taking the average house price to £150,000, while in Scotland the average price increased by 3.9% over the year to stand at £146,000. In Northern Ireland, the average price currently stands at £129,000, an increase of 4.4% over the year to Quarter 2 (Apr to June) 2017.

Regional Differences

Looking at price movements on a more local level, the local authority showing the largest annual growth in the year to August 2017 was apparently Wellingborough in Northamptonshire, where prices increased by 15.3% to stand at £215,000. The lowest annual growth was recorded in Aberdeenshire, where prices fell by 5.7% to stand at £189,000.

In August 2017, the most expensive borough to live in was Kensington and Chelsea, where the cost of an average house was £1.2 million. In contrast, the cheapest area to purchase a property was Blaenau Gwent, where an average house cost £82,000.

View of RICs

Whilst house prices continue on a generally upward trajectory, there still appears to be a lack of activity in the housing market across the UK.

According to RICS, the lack of momentum has carried on into September, with further falls in demand from new buyers and a drop in sales.

Looking ahead over the next three months, there is apparently little change anticipated in national sales activity, with expectations slipping to -1% (from +7% previously). Likewise, the twelve-month outlook is also flat at the national level, although respondents appear to be slightly more optimistic in Wales, Scotland and Northern Ireland.

“It was always questionable to talk about the housing market as a single entity but the stark divergence in key readings from the latest RICS survey demonstrates in the clearest possible terms just how important the regional narrative is at the present time,” commented Simon Rubinsohn, RICS Chief Economist. “In part, this is a reflection of affordability constraints hitting the higher priced segments of the market. It is perhaps also indicative of a shift in economic momentum in the face of the increasing possibility of the first hike in base rates in over ten years.”

“That said, we are continuing to see evidence of shortage of stock both in the new build and second-hand market,” he added. “And despite the announcements at the recent Conservative Party conference, it is hard to envisage this changing any time soon. Against such a backdrop, prices in general are likely to remain elevated and indeed, as the survey indicates, continues to rise over the medium term in most parts of the country.”

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Contains public sector information licensed under the Open Government Licence v3.0.