Spring prices have received a dose of positivity last month, despite the year-on-year growth slipping to just 2.6%.
February’s price increases show a traditional seasonal lift, with the overall trend pointing towards reduced price growth on an annual basis. Inflation has grown following the pounds’ falling value, meaning that in real terms, the capital values on the whole are not increasing at all. In several regions, however, there is significant growth, over and above the current rate of inflation.
Although most apparent in the East of England, East Midlands, North West and South West, vendor confidence levels remain high across the majority of regions. Despite high prices and oversupply in London and the South East causing the slowdown to continue, the outlying areas are providing housing market figures with the greatest support.
In the East of England, prices have grown by 9.6%; the greatest increase for any region over the last year. In light of affordability constraints and comparatively minimal rental returns, however, the rate of price growth appears unsustainable. Within this region, supply is growing and will in the coming months, lead to downward pressure on prices.
Within the property market, the Midlands and the North are on track to have a positive 2017. Prices are increasing at a sustainable level and supply is not growing. As well as this, rental yields are reasonably good in comparison to the overbought South East and London. Ultimately, this will mean the balance of Private Rented Sector investment will be tipped in their favour.
During Spring, prices will typically experience a boost. As Q1 of 2017 nears its end, and the annual trend of declining prices continues, the UK property market looks set to face a year of high inflation paired with minimal growth. During March last year (2016), the yearly rate for house price growth reached 7.9%; today’s figure is just 2.6%.