Even the quickest of glimpses through the latest housing news will have you scratching your head and wondering what exactly is going on. While historically we have all tended to look at the UK market as one, splitting down to local house price performance where applicable, maybe this is the wrong way to track house prices.
Before we look at some of the latest news in the UK housing market let us not forget that while London is under serious pressure at the moment, London property prices in the past have led the UK market higher. Whether recent London house price performance can be put down to a reality check or a serious change in trend remains to be seen.
Yorkshire house prices set for outperformance
A recent report by PricewaterhouseCoopers has cast a very interesting light on the Yorkshire housing market. The UK market as a whole is expected to post average annual increases in house prices of 3% between 2018 and 2025. When you bear in mind the ongoing concerns about Brexit this certainly injects a little optimism into the UK property market. However, the same report indicates that Yorkshire property could present an interesting opportunity in the short to medium term.
House prices in Yorkshire are expected to rise by 3.5% in 2018, 2.7% in 2019 and an average of around 3.4% between 2020 and 2022. When you also take into account the relatively high rental income in northern markets, compared to their southern counterparts, this is certainly worth further research. Between 2018 and 2022 the average house price in Yorkshire is expected to rise from £155,000 up to £182,000.
UK house price growth slowing
Data from the Office for National Statistics tends to be slightly behind some of the more popular house price indexes because they work on completed transactions. However, what we do know is that over the last 12 months the rate of increase in UK house prices has fallen from 3.5% down to 3%. Interestingly, house prices in the East Midlands have increased by 6.3% during the period while London is bottom of the charts with a reduction in house prices are 0.4%.
As we touched on in our early introduction, many people are blaming the overall reduction in UK house price growth on the London property market. However, London is going through a serious seachange in light of Brexit and, have investors really forgotten how the London property market has been dragging the rest of the UK higher for many years?
Scottish house prices increasing at above average UK rate
The Scottish government is currently fighting its UK Westminster counterpart with regards to the distribution of responsibilities and budgets after Brexit. There is also the dark cloud of independence which continues to hover above the Scottish property market. Against this background, you might be forgiven for assuming that Scottish property prices may be under pressure. However, you would be wrong…
Recent reports show that average house prices in Scotland increased by 5.8% to the year May 2018. This despite a fall of 0.2% between April and May which was attributable to a monthly fall of 3.8% in Edinburgh property prices. The average house price in Scotland now stands at £186,626 and while the Edinburgh market registered a sharp fall between April and May, the annual increase for the city is still a very impressive 10.6%. As you would expect, performance was mixed across all areas of Scotland but the general consensus seems to be that Scottish housing stock offers good value for money at this moment in time.
London property prices
It will be no surprise to learn that London house prices fell for a fourth straight month equating to a 0.4% reduction in the 12 months to May 2018. The average property in London is now valued at £478,853 according to the Land Registry with many experts predicting further falls in the short to medium term. While sceptics suggested that London property prices would collapse in light of the 2016 Brexit vote this has not been the case. In reality we are seeing a slow deflation of the London housing market although it is difficult to say with any great certainty how long this will last.
PricewaterhouseCoopers believes that London property prices will fall by 1.7% in 2018 and 2019 with a levelling off from 2020 to around 0.2%. In reality it is very difficult to predict property price movements with any great certainty when you consider the very fluid and fast-moving Brexit situation.