When you’re thinking of buying a new property, it’s a very good idea to keep your eye on housing market trends. In this article, the Cosy Unicorn team examines the falling house price growth rate in London and all across the country. |
If you are new to property hunting, or haven’t yet got your foot on the ladder, you could be forgiven for thinking that house prices are still growing as rapidly as ever - there has been steady growth since June 2009, after all.
But that is not the case. Recently, house price growth has slowed considerably all across the country. In London -- the unofficial yardstick for house price growth in the rest of the UK -- house prices grew by just 7.6 percent last December, down from 11.8 percent on the previous year. For the market, this was something of a shock; it represented the lowest growth rate for some 39 months.
While some might have expected a resurgence in the new year, it was not to be and house price growth has continued to slow down. In April this year, house price growth in London had shrunk to just 3.5 percent, down from the 13 percent seen in 2016. London was not alone in this phenomenon, either. According to the report published by City AM, across all UK cities, house price growth had dropped to 5.3 percent in April.
By the time we reached June, growth had shrunk, nationwide, for three consecutive months. This meant that growth levels had reached their lowest point since 2009 - the period in which businesses and politicians were left scrambling following the impact of the world’s biggest economic catastrophe since the great depression.
At 2.1 percent in June, nationwide house price growth had hit a four-year low. For London, this was the lowest level of growth for half a decade. For those in the know, this trend represents a continual loss of momentum in the housing market.
The potential reasons for such consistent drops are many. It could be just a blip, a reflection of how households are reacting to seven years of squeezed budgets, or a symptom of the mounting pressures on affordability in many areas across the country.
Politics may also have played a part in all this, too. The impact of Brexit is having knock-on effects as the health of the UK’s economy hangs in the balance. Economists, bankers, and real estate agents are all unsure as to the exact impact of Brexit on the country’s economic health and, therefore, the housing market.
Other factors having an impact on the housing market include the snap election where Prime Minister Theresa May lost her majority in the House of Commons, causing further uncertainty. Additionally, changes to stamp duty have caused potential buyers to be more cautious when making moves on the housing market as well.
However, while house prices growth has been small, prices in rental accommodation have seen a small uptick on previous years across the country. The only exceptions were Wales, East and North East England. On average, rent prices increased 1.3 percent a month, while in London they crept up 0.2 percent.
While by no means a huge increase, or a return to normality, the growth does perhaps hint that things may be beginning to change for the better.
Regardless, estate agents are keen to stress that smaller, regular increases to property prices are more indicative of a healthy housing market than large high-activity bursts. With that in mind, slower than usual house market price growth must not be seen as a negative, but rather as an encouraging sign of a healthy economy that could go some way to motivating would-be homebuyers in the near future.
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