Following huge growth in house prices over the past decade, the UK House Price Index for August 2018, has highlighted a slowdown in the market for the last two years. Many are speculating that stagnant wages have caused the housing market to hit an affordability ceiling point.
Average house prices in the UK have increased by 3.2% in the year to August; however, this figure is down from the 3.4% growth to July.
Overall, the figures suggest that the growth levels are broadly stable, but there is a clear downward turn, with September’s figures due to show similar signs of a housing market downturn.
Figures for August have highlighted London as the main contributor to the slowdown, with prices actually decreasing by 0.2% throughout the year to August.
Although the average house price is now £233,000, the o.2% house growth between July and August is 0.3% less than the 0.5% growth achieved between this time in 2017.
Andy Sommerville, Director at Search Acumen, comments: “As another month passes, house price growth continues to lose steam across the country. The end to the seller’s market appears to be looming and property investors will be taking stock of their portfolios and assessing where might be most impacted by a lull in valuations.
“So far, the London market appears to be taking the main brunt of this sea change. Having experienced exponential growth over the last 10 years, we have likely reached an affordability breaking point as fewer prospective homeowners search the capital for their home and prices are suffering as a result.
“This super cooling is borne out in HM Land Registry’s data on London home sales. Our research has found that between the first half of 2017 and 2018, the number of residential properties sold in the capital fell by almost a quarter as a London property has become more unaffordable for more people.
“We turn towards the Chancellor’s Autumn Budget for continued support for UK housing in order to ensure the market works for both buyers and sellers alike.”
Economic instability, Brexit implications, stamp duty land tax reforms, low wages and rising house prices have manifested in a sustained property cool-down. Whether or not, this marks the affordability breaking point, or just a slight blip remains to be seen, but, at present, the potential house buyer is refraining from rushing into any housing sale.
The autumn budget will be interesting reading to ascertain how the government will attempt to tackle this issue.
Have you noticed a cool-down in your region? What are the potential implications for the conveyancing sector?
 In H1 2017, 26,995 residential properties were sold in London, as compared to 20,831 in H1 2018. All data from HM Land Registry’s Price Paid Data for Greater London’s 28 boroughs. The data tracks the residential and non-residential property sales in England and Wales that are lodged with Land Registry for registration.