Western Morning News (Saturday)
SW leading market with rising cost of property
HOUSING market conditions remain surprisingly buoyant, with 38% of people actively moving or considering doing so, according to new figures which show property prices in the South West continue on an upward trajectory.
The pace of annual house price growth slowed slightly to 12.1% in April, down from 14.3% in March, Nationwide Building Society said, and across the UK the average house price this month was £267,620.
The South West has been leading the way with house price inflation. In just the last three months, prices have risen 3.5% across the region which, after consecutive quarterly jumps in house prices, mean home values have increased 13.4% in a year. This makes the average house price in the South West £293,968.
Robert Gardner, Nationwide’s chief economist, said: “Annual house price growth slowed modestly to 12.1% in April, down from 14.3% in March – nevertheless, this is the 11th time in the past 12 months that the annual growth rate has been in double digits.
“Prices rose by 0.3% month-onmonth, after taking account of seasonal effects – the ninth successive monthly increase, though this is the smallest monthly gain since September last year. Housing market activity has remained solid with mortgage approvals continuing to run above preCovid levels. Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.
“Nevertheless, it is surprising that conditions have remained so buoyant, given mounting pressure on household budgets which has severely dented consumer confidence.”
Mr Gardner said people’s expectations of their own personal finances over the next 12 months have “dropped to levels last seen during the depths of the global financial crisis more than a decade ago”. He added: “Moreover, housing affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased – though they remain low by historic standards.”
A survey of around 3,000 people for Nationwide this month indicated 38% across the UK were either in the process of moving or considering a move.
Mr Gardner said: “For most movers and potential movers, the majority of those surveyed are looking to trade up – the exception being amongst those aged 55 and above, where nearly 40% are looking to move to a smaller property compared to just 7% looking to move to a larger property.”
The research also found 17% of those moving or considering a move said they were doing so at least in part to reduce spending on housing, either by moving to a different area and/or by moving to a smaller property. Mr Gardner added: “We continue to expect the housing market to slow in the quarters ahead.
“The squeeze on household incomes is set to intensify with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further which will also exert a drag on the market if this feeds through to mortgage rates.”