Plethora of independent reports suggest no let up in house prices

Wednesday 04 November 2015

An annual increase in house prices has been reported, and the Centre for Economics and Business Research has released it's report on forecasted house prices. Is owning your own home becoming even less of a reality?


Land Registry: September House Price Index

On Wednesday 28 October, the Land Registry released its monthly House Price Index (HPI). The September data revealed that there was an annual house price increase of 5.3% which takes the average property value in England and Wales to £186,553. The data also showed that the monthly house prices in England and Wales had risen by 1% since August 2015.

The Index also showed that the number of completed house sales in England & Wales in July decreased by 4 per cent to 81,696 compared with 84,691 in July 2014. Sales for properties worth over £1 million decreased by 9 per cent to 1,413 from 1,555 a year earlier, possibly due to the increase in Stamp Duty announced in 2014.

Centre for Economics and Business Research: House prices to keep rising and building more will not be enough

The same week, the Centre for Economics and Business Research (CEBR) released its report on forecasted house prices in the UK. The research group revised its 2015 annual house price growth forecast to 5.6%, up from their previous prediction of 4.7% in June. The CEBR predicted that prices would rise by a further 3.5% in 2016 and 4.2% in 2017.

Nationwide: October House Price Index

On Thursday, Nationwide Building Society released its October House Price Index (HPI) which revealed that average house prices increased by 0.6% in October. The building societies data also showed that the annual house price growth increased to 3.9% in the month, a 0.1% rise on September’s figures.

Halifax: House Price Index
Just last week the Halifax Price Index indicated house prices in the three months to October were 2.8% higher than in the previous three months. This was slightly above the average of 2.5% on this measure over the first nine months of the year. The annual rate increased from 8.6% in September to 9.7%.


The CEBR’s report cited the lack of properties coming on to the market as one of the reasons behind the upward revision to their forecast of house prices. The research group predicted that this will also push UK property prices to a record high of £263,000 this year.

Nationwide said that fixed rate mortgages have remained the most popular product type in recent years, which they attributed to the uncertainty over the precise timing of UK interest rate increases, as well as a desire to lock in low interest rates. The building society added that low interest rates had helped to offset the impact of rising house prices as consumers are often able to secure a low cost mortgage deal.

In explaining findings from their own report, Martin Ellis, Halifax housing economist said: "Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015. Strengthening demand is filtering through in to higher sales levels although the ongoing shortage of supply is acting as a significant constraint on activity.

“The imbalance between supply and demand is likely to persist over the coming months,
maintaining upward pressure on house prices.”

The British Bankers’ Association (BBA) report High Street Banking Statistics - September 2015 revealed that the number of mortgage approvals in September were 24% higher than a year ago, with remortgaging up 40% and house purchases up 14%. Gross mortgage lending also rose to £12.1 billion in September, 17% higher than a year ago.

Richard Woolhouse, chief economist at the BBA, commented on the data, stating that borrowing figures in the mortgage market remain strong because customers are taking advantage of record low interest rates.

NAEA's Housing Market Report shows that first time buyers actually made up a larger proportion of sales during September. This could be down to a number of influencing factors. Again, record low interest rates probably play their part. Combine this with the various help to buy schemes for first-time buyers and regional difference and you have a complex picture.

With Help to Buy ISAs available from December, there is the potential for the number of first time buyers to increase further still next year, but of course this is very much subject to the availability of properties. After all, if there is one thing the market agrees on it is that we still have a massive chasm between supply and demand.  

It's mixed news from the National House Building Council. Although overall year-to-date figures (up to and including September) show that the number of new homes registered with NHBC is 9% higher than this time last year, figures for new completions in Q3 of 2015 fell slightly by 2% when compared to the same period last year. In total 36,219 new homes were registered in Q3 2015 compared to 36,955 a year ago.

According to Empty Homes latest report there are now over 610,000 empty homes in England. In recent times, there seems to be a bit of a movement happening across the UK aimed at addressing the issue. The momentum was given a boost last month when the Big Issue's Fill 'Em Up campaign was launched to aimed at turning empty buildings into homes. And even property developer and former Manchester United star Gary Neville made the press by letting a group of homeless people squat in a building he owns before building work commences.

Housing Minister Brandon lewis has projected a target to build one million new homes by 2020, with 200,00 sidelined for starter homes. And measures proposed for the Housing and Planning Bill include automatic planning permission in principle on brownfield sites, neighbourhood planning and guaranteed starter homes on all reasonably sized new development sites.

Mark Hayward, NAEA MD said: “If we could just get supply and demand to meet in the middle, the housing market would be functional again; it’s a real issue across the market at the moment. Developers are struggling to secure planning permission and labour is in short supply. This means that the army of house-hunters looking to buy has out-grown the number of housing available at a rapid rate, and it’s completely unsustainable.

“The introduction of the Housing and Planning Bill – which has it's second reading in the commons last week – is good news however. It includes an extension of the Right to Buy to Housing Association properties, which should help to increase supply in the housing market as homes that are sold through the scheme will be replaced on a one-for-one basis.  Nonetheless it’s really important that in urban areas, replacement properties are built within the same local authority boundaries as the original homes that were sold, so that stock is replenished evenly across city regions.

“Demand has dropped 16% this month, and FTBs are making up a larger proportion of sales – which does indicate that the market is on the road to recovery, but it simply isn’t enough. Even with the promises outlined in the Housing and Planning Bill – there are still nine house-hunters fighting for each property and new housing just isn’t being built quickly enough.”