A Q3 2015 round-up… House Price Index
Q3 has seen some interesting changes in the growth of annual house prices where regional gaps are continuously growing. There was a 0.5% increase in UK house prices in September and a 3.8% increase in UK annual house price growth. The annual pace of house price growth has increased in the last quarter to 3.8% up from 3.2% in August at the end of Q2. This small increase gives some reassurance that the pace of house price increases may be stabilising. There is still however, an underlying risk that construction activity could lag behind ever growing demand. This would result in pressure on house prices shifting them upwards and creating reduced affordability — bad news for any house hunter! Housing supply in general could potentially hit a large shortfall as recent reports suggest that there are historically low levels of property for sale where there is an increase in buyer inquires. There is reason to believe that this factor combined with a potential lack of construction could mean it is only a matter of time before we experience a buying panic. It is no surprise therefore that we can expect a rise in house prices in the coming months.
When looking at spatial differences of changing house prices in the UK, London seems to outpace the other regions as it has done in previous quarters. The annual rate of house price growth in London is the highest in the UK at 10.6% where in Q2 it was 3.3% lower at 7.3%. London is therefore, unsurprisingly, the area of most accelerated change in annual house prices at over 15%. The ever increasing gap in house prices between London and other regions in the UK is represented by a staggering difference in average house price of £247,814, with an average London property costing £443,399 versus an aggregate of £195,585.
Most regions of the UK showed an overall increase in house prices once again in Q3 2015 however Scotland and the North West areas actually showed a small decline of -2% and -1% respectively. The peak in annual percentage change of house prices occurred in Q2 June 2014 at 11.8% but today’s figures are much lower; Q3 September 2015 was 3.8%. However the current average house price for the UK is £195,585 which is higher than 2014’s peak of £189,388 in Q4 November. These figures project that Q4 2015 will once again see an increase in average house prices to the upper end of the £195,500 range.
In conclusion the gap in average house prices between the North and South of England is at a RECORD HIGH. Q3 2015 is the first time that differences have exceeded £150,000 and the 26th consecutive quarter that prices have been higher in the South of England than the North. Q4 2015 will be crucial in laying the path for how the property market will see in 2016.