A flurry of property forecasts and data add up to steady house price growth for Yorkshire. Sharon Dale reports.
Annual UK house price growth is projected to slow to around three per cent in 2018 and is likely to remain around this level until 2025, according to new analysis from PwC.
The average price is estimated to rise from £221,000 in 2017 to around £285,000 by 2025, according to PwC’s projections. Price growth at this pace means the ratio of house prices to earnings is likely to remain broadly stable, but still at high levels by historical standards.
A regional breakdown shows that Yorkshire is set to outperform the national average this year with a price increase of 3.5 per cent, followed by a 2.7 per cent rise in 2019 before averaging 3.4 per cent each year between 2020 and 2022. This would see the average house price grow from £155,000 to £182,000.
The figures are similar to those in the neighbouring North West, while the North East is predicted to see a 1.2 per cent rise in prices this year, 0.7 per cent next year and 3.1 per cent a year until 2022. The average price there is £127,000 and is expected to rise to £141,000 in five years time.
The West Midlands, with an increase of 4.8 per cent this year, 4.3 per cent next year and an average 3.2 per cent between 2022 and 2022 is likely to see the highest growth in values over the next five years with the East Midlands and Scotland close behind.
This contrasts with London, where PwC say the average house price could drop by 1.7 per cent by the end of this year, followed by a fall of 0.2 per cent next year. Values look set to rally between 2020 and 2022 when they are predicted to grow by 2.6 per cent per year. Average house prices in the capital are now £480,000 and would increase to £509,000 if the forecasts prove correct.
Richard Snook, senior economist at PwC, says: “UK house price growth remained resilient in 2017 despite a weakening economic backdrop, but has shown signs of moderating during the first half of 2018, particularly in London. However, London should pick up again from 2020. We project the average price of a London home in 2022 to be £509,000, compared to £141,000 in the North East. This means the large affordability gap between the capital and other UK regions is set to remain.”
PwC’s new analysis suggests a clear link between a lack of new housing supply, relative to population growth, and house price growth since 2011.
Richard Snook says: “Local targets need to be set and met for house building, linked to supporting infrastructure development, as well as national targets. Building new homes in the wrong places will only perpetuate England’s housing supply problems.”
PwC has also analysed the recent trend towards fixed rate mortgages, which in 2017 accounted for 94 per cent of new mortgages compared to only around 50 per cent in 2010. At the same time, only around 28 per cent of UK households now have a mortgage, as opposed to renting or owning their home outright. Combining these two factors, the company estimates that only around 11 per cent of all UK households would be immediately affected if mortgage interest rates rose, compared to almost a quarter in 2012.
John Hawksworth, chief economist at PwC, says that the Monetary Policy Committee should not be overly concerned about small rate interest rises causing significant short-term economic damage. Over at Rightmove, the latest figures for July suggest that PwC’s forecast for 2018 is on course. They reveal that average asking prices in Yorkshire rose by 3.1 per cent over the past year. They show a fall of 0.6 per cent this month and the average home value is £191,619. The average time taken to sell a property in Yorkshire is 57 days.
Miles Shipside, Rightmove director and housing market analyst, puts the slight fall in asking prices this month down to a summer slowdown.
There’s no slowdown in the S7 area of Sheffield, according to PropCast, a new website that reveals how hot or cold the property market is in specific areas.The S7 postcode, which covers Abbeydale, Nether Edge, Millhouses and Carter Knowle, is number one in the top ten hottest property markets in the UK. In S7, 67 per cent of the 160 homes on the market are under offer. They range from £200,000 terraced homes to high-yielding student lets.
PropCast, which is aimed at helping sellers set a realistic price for their home, assesses the heat rating by the number of properties for sale in an area and calculating the percentage that are under offer or sold subject to contract. Zero to 20 per cent is very cold, 20 per cent to 35 per cent is cold, 35 to 50 per cent is hot and over 50 per cent is very hot.
The second hottest markets are found in M32, Trafford, in Manchester followed by BS5 in Bristol, BH17 in Poole and B34 in Birmingham. The coldest market in the UK, according to PropCast, is London WC2, which includes Westminster.