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Property price update – January

Monitoring the housing market is very important for many, particularly those doctors and dentists who are looking to purchase their first home or who are investing in buy-to-let properties. This month’s Property Price Update looks at what happened in the market during December and also provides you a summary of what happened during 2017.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Movement during December

The latest figures released by Nationwide shows that the average house price for December was £211,156. This is a slight improvement on November, where the average property price stood at £209,988.

Activity during 2017

During 2017, house prices rose a modest 2.6%. This is significantly down on 2016, which saw a growth in house prices of 4.5%. However, this year’s rise remains within the 2-4% range that we saw prevail throughout the year.

Whilst demand for housing remains strong, due to lower interest rates and the strong employment market. Mounting pressures on household incomes has seen consumer confidence remain low.

Plus, several policy changes that were introduced over the last 18 months has put a strain on the buy-to-let market as well.

Affordability of housing

Previous year’s figures have shown a disparity in house prices in differing regions of the UK.

This still remains the case, but the latest figures also show that people’s ability to afford a home also depends on what region they live in. For instance, people living in Wales, Scotland, North of England and Northern Ireland are more likely to be able to afford a property than compared to those who live in the South-East and London, who often see themselves priced out of the market.

Saving for a deposit

Saving for a deposit remains a real challenge for many, particularly in the South-East and London. For a property in London, on average you will need a deposit of £80,000. This is £30,000 higher than it was 10 years ago. Using data on average wages in the capital, this could take someone nearly 10 years to save.

Regional differences

London remains the most expensive region. Whilst the North of England tops the list of least expensive regions.

For the first time, the West Midlands is named as the region with the strongest annual price change. Year on year, house prices in 2017 have risen on average 5.2%.

London was named as the region with the weakest annual price change. During 2017, property prices dropped 0.5%.

What can we expect during 2018?

How the housing market acts during 2018, largely depends on the UK economy and in-part how we progress with Brexit.

Overall, the UK economy is expected to grow modestly between 1-1.5%. This will impact on the housing market as it will continue to put a strain on household budgets.

During 2018, it is expected that house prices will only rise around 1%. However, there is a slightly better outlook for the long term. If the economy can gain momentum and house building can continue at its current pace we can hope to see a rise of between 3-4%.

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