Predictions from the Royal Institution of Chartered Surveyors and the UK Office for Budget Responsibility point to a slowing momentum in house prices both in the near term and into the 2020s.
City house-price data
According to the August 2018 City Index from Hometrack, UK city house prices are still on the rise at 4.2 per cent year on year. However, that is a drop compared to the 6.9 per cent per annum rise recorded over the last five years. Data from this index gives an average house price in the UK of £252,400.
The picture around rises was mixed across the UK. Hometrack also found that flat London prices (-0.1 per cent growth year-on-year) and a 4 per cent fall in Aberdeen were being countered by rapid increases elsewhere. For example, Nottingham has seen 7.5 per cent growth annually, Leicester 6.6 per cent, Liverpool 6.3 per cent, and Manchester 6.1 per cent.
More regional variations
The Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey for August 2018 pointed to robust house price growth in Scotland and Northern Ireland, and positive figures for Wales, the Midlands, the North West and Yorkshire and Humberside. Scotland had a net balance in August 2018 of +36%; while Northern Ireland had growth of +48%. RCIS defines its net balance as the proportion of respondents reporting a rise in prices, minus those reporting a fall (therefore if 30% report a rise and 5% report a fall, the net balance will be 25%).
It said: “Amidst reports of house prices (nationally) posting the sharpest monthly decline since July 2012, it is noteworthy that the August 2018 RICS Residential Market survey continues to show stronger trends in large parts of the UK.
“Significantly, whilst sentiment remains downbeat in London, parts of the wider South East, and to some extent, East Anglia, the results remain more solid in other areas, with Northern Ireland and Scotland in particular standing out.”
The RCIS added: “Nevertheless, weakness in London and the South East continues to provide an offsetting impact, leading the headline net balance [of house price growth] to dip to +2%, compared with +4% in July. Overall, this is broadly consistent with no change in prices over the period as far as the national market is concerned”.
Longer-term house-price predictions
The UK Office for Budget Responsibility predicts from Q4 2018 that UK house-price growth will fall away (based on a percentage change compared to a year earlier) from 2.9% to 2.2% by Q1 2020, rising steadily to 3.1% in Q4 2022.
Predicted house-price growth, 2018-23*
Source: UK Office for Budget Responsibility, 22 March 2018. Percentage change on a year earlier.
This article was updated on 21 September to incorporate August data.