With property market statistics mixed, what should you do?

Last week we reported that the rate at which property prices are rising increased to 5.6% year-on-year in April. That was according to official sales figures lodged with the Land Registry. A report from Rightmove shows that prices fell back in June (even though we aren’t yet through June). With property prices falling, you might expect mortgage lending to be falling, too. But mortgage sales in May rose – by a quarter when compared to April. Here we’ll try to cut through the confusion.

Property prices fall in June

Half-way through June, Rightmove reported that the house price momentum built up in the spring had stalled in June. It said that the average house price fell by £1,172, or 0.4%. It is the first price fall it has recorded in June since 2009.

It means that the annual house price increase has slowed to just 1.8%. It is the lowest rate since April 2013. However, despite the fall in property prices, the number of sales has jumped since last year. Nationally, sales numbers have jumped by 7%. The North has performed way better than the south. In the north, sales have popped by 11%. In the south, sales numbers are up by just 3%.

This discrepancy in sales numbers is also reflected in price data across the nation. In Yorkshire & Humber and the North West, prices rose by 1.7% and 1.3% respectively. In fact, prices rose month-on-month in 8 out of 11 regions in England and Wales. The largest falls were seen in Greater London, where prices dropped by 2.4%. They were down by 0.9% in the South East.

However, prices in the first-time buyers’ market have surged across the nation, with the average up by 3.5% between May and June, and 5.5% on a year earlier.

Mortgage sales swell

Equifax Touchstone, the market data research company, has released whole of market mortgage figures for May 2017. Mortgage sales jumped by 25.4% compared to April, with £3.4 billion more lending month-on-month. Every region saw higher levels of lending.

Buy-to-let financing rose by 26.1% to £2.7 billion, out of total residential lending of £17 billion.

What you can learn from this week’s property news

The mortgage lending, sales, and house price numbers paint a confused picture. They run contrary to what you would expect. Sales are up in all regions, as are mortgage lending numbers. So why have prices fallen in June?

The London and South East markets account for a significant portion of the total market, and so the price falls here have dragged down the national average. Also, the Rightmove numbers are based on asking price, and not selling price (unlike the Land Registry data). Prices may have fallen as sellers have rushed to try to sell, unnerved by the political uncertainty that now appears to have settled in for a long stay.

The increases in numbers of sales and mortgage lending indicate that buyers are seeking value, and are prepared to step in where they see the value. Unsurprisingly, this value is currently perceived to be in those markets that were left behind by the recent multiyear surge in London and South East property prices.

The outlook for the market may be uncertain, but it’s clear that where value exists, buyers are stepping up to the plate. The underlying fundamentals and undersupply of the right property at the right price will help to support prices through a difficult market phase. It isn’t 2007/8. Comparisons to the market at the height of the Global Financial Crisis are wide of the mark. Don’t expect any significant dips in property values. Invest for long-term potential, and benefit from low mortgage rates that won’t be here forever.

To stay abreast of all the property investmentnews that matters, contact one of our team today on +44 (0)207 923 6100. Ask about our newsletter. We give it to you straight. No BS. No hype.

Live with passion

Brett Alegre-Wood

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