UK Housing Market Analysis 2014

Nov 4, 2014

I’m being called upon more and more to comment in the media on the UK housing market, most recently on ITV News, CNBC and the BBC.

I’m always delighted to be invited to articulate opinion and analysis as a property expert, particularly at a time where the residential market is proving to be both exaggerated in some areas (London) and therefore fragmented in that the rest of the UK is hardly talked about at all.

And there’s conflicting data too, given the multitude of different indices that are published regularly now. Much of the confusion is due to timing differences whereby, for instance, the ONS are several months behind the curve as they report data based on sale completions, whereas the likes of the Halifax and the Nationwide report on the value of homes analysed from mortgage approvals. Then there’s Hometrack which reports on estate agents’ sentiment and Rightmove, which reports asking prices, NOT sold prices.

To make sense of all this we’ve put together some compelling analysis to nail down what’s happening right now across the UK and within the capital. It’s based on a combination of factors including house prices based on HM Land Registry data as a benchmark, but also sales transaction volumes and mortgage approvals. We’ve picked out London as a separate indicator too, simply because its the wild card. A market all on its own.

In fact, London may as well be Paris or Monte Carlo given the disparity between its value rises in the last 18 months versus, say, Middlesborough. Plus, for balance, we’ve added in the emoov Property Hotspot Index trend (our own research that tracks actual supply versus demand across the UK’s top 98 towns and cities each quarter). Then we’ve included lines that represent Yorkshire; the West Midlands and East Anglia, again for balance.

There is no doubt what the upshot is. A previously overheated UK property market, led by London activity, is cooling.

Mortgage approvals were down in September to their lowest level this year whilst sale completions were down too. And a blip in August prices has given way to a drop in September which is likely to be more than a blip and may now set the pace for a dilution in values in the short term, especially with the uncertainty of the General Election just around the corner.

Our own emoov Property Hot Spot Index usually forecasts prices for the coming months as it analyses current demand against supply of property for sale in each area. If demand weakens, as it has, this inevitably leads to price falls.

Should we panic? Is the start of a crash? Certainly not, it’s simply a small correction and a welcome one too. An overheating market is unsustainable and, notwithstanding the London lead, had to cool or else freeze.

I see no icicles yet.

Russell Quirk, CEO