Dec 2015 House Price Watch
This month's House Price Watch indicates house prices are up on average 0.5% in the past month and up 6.3% in the past year
House price growth gains pace in the final months of 2015
While bigger rises in average house prices are noted in October than November, the rate of annual house price growth has continued its upward trend since September.
It is worth noting there is a significant range among institutions as to the estimated annual change in house prices from 3.7% by Nationwide up to 9.7% by Halifax. Land Registry, as of the end of October, is estimating annual house price growth of 5.6%.
UK home sales decreased by 0.2% between September and October to 105,490; but transactions are up 6.3% on the same period a year ago (seasonally adjusted HMRC residential transactions).
Improving economic conditions boost demand — supply remains tight
Improving economic conditions, the prospect of real wage growth and continued low interest rates are seen to be boosting confidence and buyer demand. Rightmove research also reveals a confident outlook from homeowners with 85% expecting their financial situation to get better (41%) or stay the same (44%) over the next year.
New instructions by home sellers continue to be at an all-time low according to RICS’ monthly report. Furthermore, Nationwide comments on the fact that new home construction is currently well below what is needed. “Only 135,000 new homes were built in England in the twelve months to September, well below the 220,000 new households that are projected to form each year over the next decade.”
The ongoing imbalance between demand and supply is expected to persist and maintain upward pressure on house prices, particularly with the Bank of England indication that it is unlikely to increase interest rates in the short term.
As a result, the emphasis on the importance of house building in the Chancellor’s Autumn statement is seen to be a positive step. See our analysis of the Autumn statement.
Regional Summary: The average house price in London pushes above £500,000
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