New figures have highlighted an increase in average nationwide house prices last month, bringing a welcome boost for investors in the UK property market in March.
According to the latest IHS Market Halifax House Price Index report, the average price of a UK home now stands at £227,871 – a 1.5 per cent increase from the preceding month and up by an impressive 2.7 per cent from March 2017.
What is driving the demand?
Following several months of flat growth in the sector, this latest uplift in prices comes at a time when many analysts have predicted the market to hold relatively stable. Indeed, it is an unexpected lift to the residential market that is nonetheless welcome.
Jeremy Leaf, housing spokesman at the Royal Institution of Chartered Surveyors, told the Guardian: “The increase in property prices is more to do with a shortage of stock, low mortgage approvals and subdued activity, rather than any great change.”
Mr Leaf went on to add that this latest growth in values coincides with a boost in mortgage affordability. He cited further research from Halifax, which revealed that typical mortgage payments for householders in 2007 stood at 48 per cent of total income; this compared to a figure of 27 per cent in the fourth quarter of last year.
Overall, factors including lower levels of unemployment, ongoing low mortgage rates and a shortage of properties for sale in many areas, coupled with higher levels of demand, means house prices are again now rising across the country.
Northern property market is powering growth
Data published this month by Hometrack has also shown it is properties in the north of England and Scotland that are a major driving force behind the UK’s property price inflation at present.
According to the company’s UK Cities House Price Index for March 2018, the nation as a whole has witnessed a 5.5 per cent upturn in values during the last year, but it has been cities like Edinburgh (up 8.8 per cent), Nottingham (eight per cent) and Manchester (7.4 per cent) that have supported such impressive growth.
England’s Northern Powerhouse hubs of Manchester, Liverpool and Leeds were cited as being a major draw for investors at present, with burgeoning markets for buy-to-let and sustained price growth that is exceeding the national average.
Overall, the potential for further growth in the coming months for the Northern Powerhouse was shown to far exceed that of London, with values in the capital not rising as quickly due to large-scale development works.
Indeed, the research from Hometrack showed that for every completed transaction in London there are now 1.5 homes coming to the market. This means supply is outstripping demand and that is not a situation that promotes value growth.
What can we expect next from the UK property market?
Dale Anderson, project manager at Experience Invest, commented: “The latest figures from Halifax show the resilience of the UK’s property market. Overall, we expect regional house price growth to outpace the performance of the London market throughout the rest of the year.
“Northern Powerhouse property remains a popular choice for property investors, with cities like Liverpool, Manchester and Newcastle presenting real potential in terms of house price and rental growth.
“We forecast that commuter belt towns within striking distance of the capital will witness strong growth throughout the rest of 2018, as more people look outside of London for better value for money.”