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Property News

UK property prices: Nationwide index for December

Part One

It's been a lean few weeks for those of us who monitor property prices, with all the major indices published later than usual. Typically issued towards the end of the month to which it relates, for instance, the latest Nationwide house price index only appeared at the start of January. Delay notwithstanding, its contents are as fascinating as ever, underlining yet again the unpredictability of this country's housing sector. Nethouseprices readers might recall that, following sluggish sales in October and November, most commentators expected the market to stall entirely in December before picking up a little pace in the new year. In fact, says Nationwide, prices rose by an average of 0.6 per cent during that month, up from 0.1 per cent in November. As well as the usual statistical detail around house prices, the December index also sets out some intriguing data about housing affordability in the countries and regions of the UK. So dense with facts and figures is the lender's index for December, that we will be covering it in two separate articles. In today's instalment, we look at the general house price statistics contained in the report.

HPI for December: the headlines for the UK

Nationwide, which bases its index on its own mortgage-lending activity rather than on official Land Registry sold prices, found that:

- House prices rose by 2.6 per cent in the twelve months to December, down from 4.5 per cent in 2016.
- Prices increased by 0.6 per cent in December, up from the 0.1 per cent growth recorded in November.
- The average cost of a home in the UK was £211,156 in December, up from £209,998 in November.

Discussing his institution's latest output, Nationwide's Chief Economist, Robert Gardner, said that the annual figure of 2.6 per cent growth was broadly in line with expectations. He said that he believed low mortgage interest rates, the ongoing health of the jobs market and housing supply shortfalls had been responsible for such house price growth as was recorded last year. Minimal wage growth, rising general inflation and declining consumer confidence were factors which had caused the market to slow in comparison with the previous year. And what of house prices in the UK during the coming year? Well, Mr Gardner says that he envisages growth of just 1 per cent in 2018. He emphasises, however, that there are many variables which could influence the sector. The probable impact of Brexit, for example, is still imperfectly understood.

The countries and regions of the UK

As useful as UK averages are for headline writers, they can be misleading, since they conceal the dramatic differences in house price performances across the regions. Consider, by way of example, Nationwide's figures for Quarter 4 2017 in the countries and regions of the UK:

1. West Midlands

- Average house price = £182,861.
- Annual growth to Q4 2017 = 5.2 per cent
- Annual growth to Q4 2016 = 4.1 per cent.

2. South West of England

- Average house price = £239,576.
- Annual growth to Q4 2017 = 4.8 per cent.
- Annual growth to Q4 2016 = 4.4 per cent.

3. East Midlands

- Average house price = £177,180.
- Annual growth to Q4 2017 = 4.6 per cent.
- Annual growth to Q4 2016 = 4.9 per cent.

4. North West of England

- Average house price = £157,488.
- Annual growth to Q4 2017 = 4.0 per cent.
- Annual growth to Q4 2016 = 3.7 per cent.

5. Wales

- Average house price = £150,885.
- Annual growth to Q4 2017 = 3.3 per cent.
- Annual growth to Q4 2016 = 2.4 per cent.

6. South East of England

- Average house price = £277,030
- Annual growth to Q4 2017 = 3.1 per cent.
- Annual growth to Q4 2016 = 6.9 per cent.

7. Scotland

- Average house price = £146,578.
- Annual growth to Q4 2017 = 2.6 per cent.
- Annual growth to Q4 2016 = 2.2 per cent.

8. East Anglia

- Average house price = £223,613.
- Annual growth to Q4 2017 = 2.3 per cent.
- Annual growth to Q4 2016 = 10.1 per cent.

9. Northern Ireland

- Average house price = £131,989.
- Annual growth to Q4 2017 = 2.0 per cent
- Annual growth to Q4 2016 = 0.1 per cent.

10. Yorkshire and Humberside

- Average house price = £151,747.
- Annual growth to Q4 2017 = 1.8 per cent.
- Annual growth to Q4 2016 = 4.0 per cent.

11. Outer London

- Average house price = £361,598.
- Annual growth to Q4 2017 = 1.2 per cent.
- Annual growth to Q4 2016 = 6.8 per cent.

12. North East of England

- Average house price = £124,535.
- Annual growth to Q4 2017 = 0.2 per cent.
- Annual growth to Q4 2016 = 0.1 per cent.

13. Inner London

- Average house price = £470,922.
- Annual growth to Q4 2017 = -0.5 per cent.
- Annual growth to Q4 2016 = 3.7 per cent.

The obvious observation is that, atypically, London and the South East of England were outperformed by most other regions last year. This has been attributed variously to Brexit having a disproportionate effect in the more southerly parts of Britain, to changes to property tax hitting those areas hardest and to affordability issues. The reasons for such strong growth in the Midlands, North West and South West of England and Wales are less clear, since these regions each have their idiosyncrasies which make them attractive to buyers. The commonalities seem to be that their local economies are flourishing, there has been significant infrastructure investment and housing is comparatively affordable, meaning that there is plenty of room for prices to rise. Crucially, they are also attracting those investors who have recently eschewed London and the South East.

As we stressed in our preview of 2018 (https://nethouseprices.com/news/show/2541/uk-property-prices-the-year-ahead), there are no immediately apparent reasons why these regional trends shouldn't persist through the coming twelve months. Certainly, few commentators are expecting an appreciable economic slowdown and the conditions which have supported growth in the regions aren't showing any signs of changing. This being said, these are uncertain times, and we will be revisiting our predictions frequently throughout the year.

We hope you have found this feature useful. Visit us again soon for our summary of Nationwide's observations about housing affordability and deposit savings. Coming up shortly: Halifax index of house prices in the UK.

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Source: Nethouseprices.com 09.01.18

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