The UK property market is going through a significant slowdown, with prices stagnating or even falling in some areas, latest figures suggest.
Recent data from the most closely watched housing market indicators released by Halifax, Nationwide and the Royal Institute of Chartered Surveyors (RICS), all point to increasingly poor conditions for sellers in many areas.
Market slowest in four years
According to Halifax, the cost of the average home fell by 0.1% in April; from £219,788 in March to £219,649. This is the third successive the bank has reported a drop, with prices peaking in December of last year at £222,190.
On an annual basis, it means price increases slowed to 3.8% in April, the lowest for four years.
Squeeze on incomes hits prices
Nationwide has reported similar findings, stating that prices fell for the second month in a row, but by a greater amount than Halifax indicated.
The building society believes the drop of 0.4% during April reflected the “emerging squeeze on real incomes” with “household budgets… coming under pressure, as wage growth has moderated and inflation has accelerated”.
Both stock levels and buyer interest drops
The highly respected RICS housing market report also suggests that things are far from buoyant.
RICS says new instructions remained negative for the 14th month in a row in April, leaving the number of properties estate agents are trying to sell close to record lows.
However, this could prevent current greater price falls as lower demand doesn’t usually have the same impact as it would in a market where more property is available.
Additionally, 54% of agents saw a drop in enquiries from new buyers and reported that agreed sales were beginning to dry up.
Market “in neutral” say mortgage lenders
The reports come just after the Council of Mortgage Lenders (CML) said it believes the UK market to be in “neutral gear”, with something of a shift to first-time buyers and away from buy-to-let landlords and home movers.
Some areas still ‘hot’
However, RICS report suggests a few hotspots remain and prices rose in some areas in April, according to one-in-five agents.
Attractive cities such as Cambridge and Bristol are benefiting from those selling up in London and moving out. The North West is also seeing a relatively strong market.
The London market continues to be weak, with most parts of the capital seeing a negative price trend for the 13th month in a row, RICS figures show. East Anglia and the North East are also fairing badly.
Overall, a buyers’ market?
The figures suggest it’s slowly becoming a buyers’ market, and has been so in London for some time.
However, lack of supply should put a break on larger price falls, while some regional areas, especially a number of provincial cities with strong employment levels and high-tech businesses, continue to simmer nicely.
Buyers should take the temperature of the local market they’re looking in and adjust their expectations, and offers, accordingly. But, on the whole, it does appear conditions are moving in their favour.
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Published 26 May 2017