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Housing Market: Game of Two Halves

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Everyone has been watching the housing market carefully in recent weeks, and for good reason.

It’s the most important time of year for house prices as all the key indices report on the Spring and early Summer housing market.

The question on everyone’s lips this year is; will the ongoing political and economic uncertainty caused by Brexit continue to put the brakes on the market?

House prices

The answer to this question is, it depends where you live.

Because the UK is currently a game of two housing halves; London is witnessing average price reductions of up to 1.2% a year, closely followed by the South East with a drop of 0.8%, the Land Registry says.

By comparison, most other regions are enjoying normal conditions. House prices are rising by 2% or more a year in the West Midlands, Yorkshire, the North West, North East and Northern Ireland.

Wales is enjoying a particularly strong housing market; property prices there have risen by 6.7% annually.

Three key indices

Here’s what the latest mortgage lender and Land Registry house price index figures are saying.

Halifax +5.7%

In summary: The Halifax is the most upbeat of all the indices, revealing a 2.3% increase between April and June compared to the first quarter of the year. It also says house prices have risen by 5.7% over the past 12 months, and that the market is ‘resilient’ despite Brexit. But it warns that the number of homes coming on to the market remains weak as many people hold off selling their home.

Nationwide +0.5%

In summary: The Nationwide is gloomier about the housing market, recording a monthly house price increase of just 0.1% during June and 0.5% over the past year. This is largely because the Nationwide lends money to home buyers across a wider area of the UK than the Halifax (see above), which operates more outside of London and the South East, where house price rises have been weakest.

The Land Registry +1.4%

In summary: This index shows an overall picture of house prices slowly deflating over the past year, a trend that continued during April. The Land Registry claims to be the most accurate house price index because it records the final prices paid for homes. But it lags behind the key mortgage-based indices (from the Halifax and Nationwide). Nevertheless, it says house prices increased by 1.4% during April, worse than during February but better than a year ago.

What does this all mean for buyers?

Buyers might be put off by these house price indices, which reveal a softening housing market overall. But it’s a very regional picture.

House prices remain affordable but are rising in many big urban areas outside of London and the South of England. So, if you want to get on or climb the property ladder, now could be a good time. But in London in particular, many buyers are waiting to see when the market ‘bottoms out’ and price reduction come to a halt.

It’s unsure who is most affected out of first or second time buyers. Plenty of help for first time buyers exists, such as different schemes, however lack of understanding about the market can hold them back.

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Last Updated: July 23rd, 2021

Phil Spencer

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