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Housing market at its most inconsistent despite slow price rises

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The continuing disparity between house prices across various regions in the UK clearly demonstrates that the market is at its most inconsistent, according to the latest report from Carter Jonas.

Despite house prices experiencing an overall increase across the UK, the report reveals polarising regional differences based on their respective house price to earnings ratios. There has been notable growth in Yorkshire and the Humber (3.6%), the West Midlands (3.4%) and Wales (3%), but more affluent regions are facing either flat or declining prices including London (-1.9%), the South East (-0.4%) and the East of England (0%).

The ongoing juxtaposition between rising house prices and falling wages has led to the continuation of buyers looking elsewhere within their regions in search of better value for money, causing inconsistencies in markets at a local level. While Oxford has posted significant growth of almost 5%, areas to the West and South of the county have witnessed annual declines. It is a similar story in Bath, where growth of 4% starkly contrasts with nearby Wiltshire, which has posted a decline of -0.5%.

The continued reduction in transaction volumes from last year is reflective of the impact that these micro-inconsistencies are having on house prices and market activity.

The first quarter of 2019 saw approximately 3% fewer approved mortgage loans, compared to the same quarter in recent years, at just under 170,000. Research suggests that home movers are retreating from the market slightly with mortgages for this group down 4% over the same period last year. Meanwhile, there has been no change among first time buyers, whose growth in the number of mortgage approvals has levelled off since 2015.

Lisa Simon, Head of Residential Sales, Carter Jonas said, “The UK is still trying to navigate an uncertain political and economic climate with a recent change in government and a potential no deal Brexit looming in the background. It is therefore no surprise that the market is a little bit slower, but overall growth is a positive indicator.

“While market performance continues to fluctuate among regions at a level never quite seen before, it is important to recognise that the more affordable areas such as Yorkshire & Humber continue to harbour opportunity and appeal.

“However, the fluctuations in markets that we are seeing are more complex than a simple north-south divide. The imbalance between buyer demand and housing stock at more of a ‘micro level’ reveals a market that is diverging. Buyers are fundamentally in search of value and the market is being supported by first timer buyers, who are currently the most active group in the market.”

The rental market

The Buy to Let market has continued to contract, with just 15,200 mortgages approved in the first three months of this year, 7% fewer than the same quarter in 2018 and 17% fewer than 2017.

In defiance of this shrinking market, UK rents have increased by an average of 1.2% annually with the East Midlands posting the highest growth (2.1%) and, London (0.5%) and the North East (0.4%) the least.

However, the government’s legislative crack down on landlords and agents has had market-wide consequences. The report indicates that landlords are continuing to leave the market and that the number of new landlord instructions fell again this year, which has resulted in less stock in the marketplace.

Simon added, “The weight of heavy legislation is continuing to take its toll on the Buy to Let market. Whilst our business fully supports the Government’s ambitions to improve standards for both landlords and tenants, the sheer volume of regulation only adds pressure to an already stunted supply of housing. This, in turn, has increased the cost of existing stock.

“The government would do well to prioritise stabilising the private rented sector alongside Build to Rent, at least while the latter is still in its infancy. With 4.5m households currently in the private sector and only 140,000 build to rent units built or under construction, this new pipeline of housing caters for just 3% of households currently renting privately.

“The government needs to consider how they can better support landlords as well as tenants, in order to restore the balance between supply and demand.”




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