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Making Sense of the Latest House Price Statistics

Making Sense of the Latest House Price Statistics

Despite recent headlines that revealed over 160 houses each day become valued at over a million pounds, prices across the UK have actually been cooling for some time. Figures from the Land Registry showed that in 2014 three times as many houses sold for seven figure sums compared with ten years ago – but for the market as a whole the year saw a downward trend in house price growth.

The House Price Sentiment Index (HPSI) used by the estate agents Knight Frank and Markit to track values found that in January of this year only 19.5 per cent of UK households reported price rises, with 3.1 per cent of the 1500 households used for the survey reporting a definite fall in value.

There were reports of price rises in every one of the eleven regions of the UK that make up the HPSI, but the overall UK index rating stood at 58.2, the lowest it has been for 14 months and down from the 2014 average which stood at 61. The regional variations of the January figures show that in London the index stood at 65.3, the south-east at 63 and Wales and the north-west at 53.

When compared with a recent high of 74.9 in London in April 2014 it is clear that price rises have become much diminished through much of the last year. Recently released data from the Nationwide shows that by their index system price growth slowed for the fifth consecutive month in January on an annual basis. The building society recorded price rises at 0.3 per cent over the month, up from 0.2 per cent during December, but measured against the same month in 2014 prices rose at their slowest for 14 months.

Whether the slowing is necessarily a cause for worry is questionable. More modest rises reduce the risk of prices becoming prohibitive for the majority of potential buyers and the threat of a housing bubble. When the slowing price rises are considered with the fall in unemployment, increases in wage packets, growing consumer confidence and the recent reforms to stamp duty it seems that the market may well be becoming more balanced towards the buyer.

These factors make it probable that though prices will remain subdued in the run-up to the election in May, demand will surge in its aftermath contributes to more significant market activity and price growth by the middle of 2015. Already in the period following the stamp duty reforms estate agents are reporting more buyer interest. The National Association of Estate Agents reported in December the highest number of potential buyers registering with them had reached its highest since 2004. 

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