What’s happening to UK house prices? The question I am asked most often is “What’s happening to house prices?” This is to be expected in the course of my job – but the same query often arises outside office hours too. During social occasions I have learnt, after a few instances of watching my inquisitor’s eyes glaze over as I (perhaps too enthusiastically) explain the nuances of pricing in different parts of the country, to tailor my answer geographically. If meeting for a coffee in central London, then the reply is that headline prices for prime property in the area are falling year-on-year although recent monthly data suggests that these declines may have bottomed out. A tube-ride away beyond Zone 1 however, to lunch in West Ealing or Royal Docks and the answer is a little different – average values in many areas of the capital are still seeing annual growth, albeit at a slower rate than the doubledigit growth seen over the last few years. Beyond London, the differences continue. On returning home from a recent visit to the North York Moors National Park, a quick check on residential values in the area showed that average prices have fallen by 3.4% year-onyear in the nearby local authority of Redcar & Cleveland. However, further south, average prices in North East Derbyshire, adjacent to the Peak District National Park, are up 8.3% year on year. This is all happening as the ‘headline’ figures for house prices suggest that the market is moving in one direction. Headline indices (and there are a few) are useful as a macro look at what is happening in the market, but less so as an indication of local market dynamics - a point often made by the economists who compile the national data.
Gráinne Gilmore Head of UK Residential Research, Knight Frank Newnham, 1993-1996
So what is driving divergent levels of growth in different localities? The local economy is a key factor to consider. For example, the central London housing market was the first to bounce back from the financial crisis – there were several factors at play here, but key among these was the resilience of the capital’s economy in the post-recession period. The movement in prices caused a ‘ripple-out’ effect across the rest of London and beyond to the South East in terms of price growth, especially after 2013 when the wider economy started to gain some momentum. Knight Frank’s prime country index, which tracks the pricing of £1m+ properties across the country, shows that values are broadly flat in the year to June 2017. But this belies a split in performance between rural and urban markets. Average prices in more rural areas have risen by 7% over the last five years, compared to 18% growth in urban markets. Many of these urban markets are located within commuting distance Cambridge University Land Society
Published on Oct 13, 2017