Price growth flat, but signs of an increase in activity
House prices showed no change in October, according to Nationwide. This puts year to date growth at 1%, in line with our forecast for 2018. We have recently published our updated forecasts to 2023, which predict 14.8% growth for the nation over the next 5 years. You can read the full report here: http://sav.li/cfl. The number of surveyors seeing falling house prices slightly exceeded the number seeing rises, according to the September RICS survey. Most surveyors continued to report falling numbers of new enquiries and new instructions. Surveyor optimism seen early in the summer has translated into two comparatively strong months of transactions in July and August, with August having the highest number of new loan completions since 2007. A return to greater negativity amongst surveyors suggests this uptick may be short lived. But the 7 month decline in transaction volumes has stopped for now.
One driver of transactions is the Help to Buy equity loan scheme, which supported approximately 1 in 8 first time buyers in Q1 2018. The scheme’s extension was announced in last week’s budget: it will now continue until 2023 but will be restricted to first time buyers only from 2021. It will also have new maximum value caps, set regionally. Since the scheme’s start in 2013, 170,000 homes have been bought using it, the majority (81%) being first time buyers. This extension has provided much needed clarity, and has been welcomed by most major housebuilders. Other major announcements were for a stamp duty cut for shared ownership purchases and an additional 1% stamp duty for non resident buyers. See our full response to the Budget here: http://sav.li/cgq.
Annual house price growth was strongest in the Forest of Dean, Stirling and Burnley, all at approximately 10% growth over the 12 months to August. London remains the weakest performer, due in large part to Brexit impact on sentiment, with Kensington & Chelsea, Westminster and Camden showing the largest annual falls of 9%, 7% and 5% respectively. Annual rental growth for the UK remained at 0.9% in September, according to the ONS. The East Midlands continued to show the strongest annual growth of 2.9%, followed by the South West at 2.1%. London has been the weakest performer, with rents 0.3% lower than this time last year, though we forecast higher rental growth in London than other regions over the next 5 years.