Asking Prices Surge in the UK


Spring optimism has served to rally home prices strongly this month. Consequently, year- on-year growth has also increased slightly (a countertrend uptick) but, with the latest inflation figures showing 3.5% (RPI ex. housing), UK home prices are really going nowhere overall.

Despite significant year-on-year growth in several regions, 2017 looks set to be a year of stagflation for UK property. Vendor confidence is benefitting from a spring boost in many regions and this effect is most apparent in the South East and South West.

Whilst the London market remains subdued, it is the more outlying regions that are supporting the national housing market figures.

Prices in the East of England and the East Midlands have risen most during the last 12 months (9.4% and 5.6% respectively). However, unlike the East Midlands, supply is rising rapidly in the East of England and this will serve to attenuate price rises over the coming months.

Thus far 2017 bodes well for the Midlands. Price growth is over and above the level of inflation but the rate appears sustainable as supply is not increasing. Moreover, rental yields, which fundamentally underpin house prices, are better there than in overbought London and the South East, and this will encourage continued investment.

Overall, price rises are much more subdued this year than last. In April 2016 the annualised rate of increase of home prices was 7.5%; today the same measure is just 3.0%.

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