Housing Market Reaching Crisis Point?
22 August 2017
The housing market has had many ups and downs in recent years, but with unprecedented governmental changes to taxes and the effects of the EU referendum still to be felt, there is more to be reported on in the looming crisis that the housing sector finds itself in. The Telegraph has reported on this this week, as it highlights in one article that house prices in the nation has increased by £10,000 a year on average.
According to official figures obtained from the Office of National Statistics (ONS), the average property price in June was £223,257, compared to £214,000 last year, and on month-by-month basis, house prices increased by £2,000 on average. Even though there has been a notable slow down in the speed of growth, with house prices increasing by 4.9% in the year to June compared to 5% in the year up to May, the ONS has commented that growth had remained the same at 5%.
The article also mentioned comments made by Paul Smith, the chief executive of Haart, the UK’s largest independent estate agent. He remarked: ”Along with consumer price hikes and falling wage growth, unaffordability is reaching crisis point.” This follows his report that the rise in prices had ensured a 20% fall in first-time buyer registrations in Haart’s branches in the last year.
The biggest rise in house prices occurred in the east of England, where average prices rose 7.2% to £286,623. the East Midlands also reported a similar climb of 7.1%. In the North East of England, prices saw the smallest annual growth at 2.5%, whilst in the capital, London, within a year prices crept up by 2.9%. Again, on a month-by-month basis, the average house price in the capital dropped by 0.7% in June to £481,556. Within the City of London, average house prices decreased by more than 20% in the year to June to £723,576. The region that boasted the highest growth was the Orkney Islands, where the average price of £147,929 reflected a adjustment of 20%.
Senior economist at PWC, Richard Snook, also had something to say about this issue, remarking: ”There has been much reflection about the 10-year anniversary of the global financial crisis and housing market performance over this period highlights the disparate performance across different parts of the UK.” Ever since the economic turmoil established a decade ago, there is little wonder about the effect it has had on the housing market.
The ONS figures are gathered from transactions form the Land Registry, and the statistics follow a separate report from the Royal Institution of Chartered Surveyors in the last week, which revealed activity in the market was slowing down to a halt as London and the South East pulled down the national trend.
The instability in the market is a daily reminder of how quickly a financial crisis can affect other sectors, such as the housing market, and how slowly it takes to recover.