House price growth flat amid affordability squeeze

Cheryl Sanders
July 17, 2017

Rightmove's findings for July come after the Royal Institution of Chartered Surveyors reported that the average number of properties available per agency branch had fallen to an all-time low in June. Meanwhile, the annual rate of price increase has slowed to 1.8%, the lowest since April 2013.

Property experts believe that buyers have hit their price ceiling as double-digit house price growth has far outpaced wages over the past five years. That's a rise from June, when prices fell 0.4 per cent month-on-month, and rose a modest 1.8 per cent on the year before.

The biggest monthly falls were recorded in the North East - where prices dipped 1.3% - and Yorks and Humber - where prices fell 1%.

This was closely followed by the West Midlands which saw a 0.7 per cent increase and Wales, where asking prices increased by 0.6 per cent.

The fundamentals of the housing market appear to remain robust a year after the shock referendum result, but stretched buyer affordability continues to act as a price brake. "Sellers coming to market at this time of year have to price more keenly as the traditionally bubblier spring selling season is over and prospective buyers are distracted by their own summer holiday plans", said Shipside.

Miles Shipside, Rightmove director and housing market analyst says: "House price rises are muted despite high housing demand, indicating that we have left the stage of the cycle where price rises exceed the rate of inflation".

"While the number of existing owners coming to market this month is up in eight out of ten regions compared to a year ago, giving more fresh choice, it has to be kept in mind that the comparison is against a subdued new listing period in 2016 around the time of the referendum". The high levels of sales being agreed show that the underlying fundamentals are largely unchanged with high first time buyer demand which drives movement higher up the ladder, all aided by the cheap cost of borrowing, ' he explained.

The cooling property market adds to signs that consumer spending, the engine of economic growth for the past year, is losing momentum.

He added that the market was being bolstered by solid fundamentals of low unemployment, low interest rates, strong demand and historic undersupply of homes, which reduced the effect of any wobbles in confidence; "as a result almost half the properties on the market, over 45%, have sold signs slapped across them". They were 3% higher on the Monday after the election than the Monday before, showing that people are getting on with addressing their housing needs, ' he concluded.

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