October 2017 Market Update
Data from the September Council of Mortgage Lenders press release shows that lending to first time buyers was 14% up on a year previously. First time buyers will often start chains going as the seller becomes a second time buyer and so on. Similarly ‘Home Movers’ (those already owning a home), were reported to be borrowing 15% more than the same period last year, which equated to 10% more actual loans. So the most recent evidence indicates that market activity has been growing.
The table below shows the year on year house price growth that has been reported from various sources for our region. As the chart shows, measured house price growth in the Yorkshire & Humber region varies according to the business that is doing the measuring, but all are showing a positive score and the average reading of 2.4% is reasonably healthy, certainly by the standards of the past decade.
Since the market crash of 2007, much of London has seen a doubling of house prices whilst other areas including Yorkshire and the Humber have seen little, if any, growth. But the signs are that the London market has now stopped growing and that the wave that spread out to its adjoining regions, such as the South East and East Midlands, is now coming further afield and starting to ripple on our shores. It does not seem likely that it will be the inflation driven wave of previous cycles but it is a recovery of sorts.
But there are some economic headwinds which are likely to limit any future growth. Firstly consumer sentiment is beginning to rein in which indicates a more cautious environment. High street spending is beginning to fall and new car registrations are also down on last year, indicating a reluctance to make big ticket purchases. Inflation is approaching 3% and this is outstripping wage growth which makes people feel poorer and the likelihood of a rise in the Bank of England Base Rate is also ever more likely.
But again there is a flip side to this as the limited / flat house price growth over the past decade has made our region less vulnerable to any house price falls or market turbulence. So we have more reason to expect a brighter future for the housing market than other regions where prices have been growing. This is illustrated in the chart below which uses data from the Nationwide’s First Time Buyer Affordability Index. The chart shows mortgage payments as a percentage of mean take home pay and our region is one of the best performing, which means that buying your first home is much easier in our region.
So as always the economic and housing market messages are mixed, but the upsides for our region certainly seem to outweigh the downsides.