The property website Home is warning that while prices may show an early spring uplift there’s a long-term slowing of the market underway - and increasing inflation means real capital values are effectively stagnating.
“We enter 2017 on a declining year-on-year price trend and this key indicator shows that the UK property market is cooling overall. In February 2016 the annualised rate of increase of home prices was 8.1 per cent - today the same measure is a mere 3.0 per cent” says Doug Shephard, director of the website.
So whilst Home says there has been “explosive” month-on-month price growth in the East of England - up 1.9 per cent just in the past four weeks alone - average home prices across England and Wales have shown a more modest 0.6 per cent rise. Much of that is down to rises in the East and South East regions.
Shephard says the supply of property entering the UK market overall dropped by five per cent over the past year - but by contrast supply has increased in the East and South East by eight per cent and four per cent respectively, compared to February last year.
Prices have hardly moved in Greater London: they are up 0.1 per cent in the past month but are down 1.2 per cent over the past year.
“A surge in monetary inflation due to a weak pound means that capital values are really going nowhere in real terms ... The London market continues to suffer the consequences of oversupply and overly high prices” Shephard says.
He warns that although the East of England is still performing exceptionally strongly, this may not last. “Worryingly, supply is also rising in the region and this observation suggests that the East will soon be the next region to endure the same post-boom plight as London and the South East: such rapid growth raises concerns over the sustainability of this rally and home prices are becoming seriously out of step with earnings and rents” he adds.
Home’s index is calculated every month using around 500,000 UK property house prices found in the Home.co.uk Property Search Index.