The value of property might be falling, says the ONS, but it's against a backdrop of continued affordability struggles, a shortage of housing stock and political uncertainty.
What’s the latest?
Properties saw £1,200 wiped off their value in March as the housing market continued to show signs of slowing down.
The typical cost of a UK home dropped by 0.6% during the month to stand at £215,848, according to the Office for National Statistics (ONS) which takes its data from Land Registry sold prices.
The annual rate at which prices are rising slowed to 4.1%, which is its lowest level since October 2013.
Price falls were recorded in all regions of the country with the exception of the West Midlands and Wales.
However, the continued shortage of homes for sale is expected to support a rise in property prices.
Why is this happening?
A number of factors have combined to put the brakes on the property market. For example:
- Uncertainty triggered by Brexit and next month's General Election is prompting both buyers and sellers to sit on their hands.
- Affordability is becoming increasingly stretched following strong house price gains in the past couple of years.
But the number of properties for sale remains close to a record low and is still less than half the level seen before the 2008 financial crisis. And while this shortage is depressing transaction levels, it makes a house price correction less likely.
Check out our 7 Housing forecasts for 2017
Who does it affect?
London saw the biggest price falls during the month, with the cost of the average home in the capital dropping by 1.5% or £7,400 to stand at £471,742, according to the ONS.
Prices also dipped by 1.3% in the north east, 0.8% in both Northern Ireland and the east, and by 0.7% in the south west.
Southern markets have been most affected by the slowdown, with annual house price growth standing at only 1.5% in London, while it eased to 2.8% in the south west and 3.8% in the south east.
By contrast, growth is more robust in the Midlands, with prices rising by 6.7% year-on-year in the East Midlands and by 6.5% in the West Midlands.
This time next year, UK house prices will be...— Zoopla (@Zoopla) May 17, 2017
Sounds interesting. What’s the background?
Property commentators stressed that the prevailing weakness in the housing market did not necessarily signal the start of a house price correction.
While values fell during March, property prices were still higher than they had been a year earlier in all regions of the country, except the north east, where they were just 0.4% lower.
They also warned not to read too much into only one month’s figures, particularly given the current uncertainties faced by the UK.
But Jeremy Leaf, former residential chairman of the Royal Institution of Chartered Surveyors, said a more subdued market with fewer transactions is softening prices and making buyers and sellers more realistic.
Top 3 takeaways
- Properties saw £1,200 wiped off their value in March
- The typical cost of a UK home dropped by 0.6% to stand at £215,848
- The annual rate at which prices are rising slowed to 4.1%, its lowest level since October 2013
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