The latest house price index by Nationwide shows that the UK housing market has stuck to its New Years resolution and come out of the blocks quickly in January with a steady monthly rate of growth of 0.6% as it shakes off the Christmas lull. The market also enjoyed a more unexpected annual growth rate of 3.2%, putting the new average UK house price at £211,756 according to Nationwide.
Despite slower market conditions there have been a few signs of a stabilising market in recent weeks. Yesterday Hometrack reported that the amount that homeowners were having to reduce their property by to secure a sale had reduced across the nation, other than London and the South of course.
The latest English Housing Survey also highlighted that homeownership levels have remained stable over the last few years. However, there was a notable decline in the number of first-time buyers (25-34) making it onto the ladder, as well as an increase in the private rental sector as a result.
Nationwide have observed a slow in the number of mortgage approvals as well as a reduction in both buyer and seller demand. So while buyer demand remains subdued, the lack of property on the market has meant prices have continued to rise. While this is great news for those already on the ladder who will see their bricks and mortar assets appreciate in a slower market, it means the barrier to homeownership has grown even larger for those struggling to buy.
With market conditions likely to maintain this lower but consistent rate of pace for the year ahead, it is predicted first-time buyers will continue to be resigned to the private rental sector unless the Government delivers on its promise to build more affordable starter homes.
Further signs that the market is beginning to find its feet in the New Year, shaking off the Christmas price lull and continuing to stabilise in the wake of the Brexit vote, albeit at a slow and steady pace.
However, while we remain a nation of aspirational home buyers and the level of those owning their own home has remained fairly robust over the years, their ageing population and the continued increase of the private rentals sector highlights a broken market, working against, and not for first-time buyers in particular.
Yes, the outlook for the economy is modest and both interest rates and unemployment are expected to remain low, but with as many sellers currently sitting on the fence as buyers, the severe lack of housing stock available for those looking to get on the ladder has been further exacerbated.
As a result, even in slower market conditions, the financial barrier to homeownership has continued to grow, putting it further out of reach for the average UK buyer. Will the Government do anything meaningful to address this lack of supply over the coming year? I would think it very unlikely indeed.Russell Quirk