National figures hide local fluctuations

by Mark Hordern, GSPC

15 May 2015

House prices across the UK rose by 2.2% in the last three months and are now 8.5% higher than they were a year ago according to the latest The Halifax's House Price Index.

The annual rate of growth reported by the Halifax has fluctuated between eight and nine per cent from some time, with minor exceptions in July 2014 (10.2 per cent) and December 2014 (7.8 per cent).

The Halifax also reports consumer confidence is also at its highest level for almost a year. Its Housing Market Confidence Tracker shows that the number of people believing now is a good time to sell at its highest level since the survey was started in 2011.

Halifax Housing economist, Martin Ellis, attributed the modest but continued growth in house prices to 'economic improvement, rising employment and low mortgage rates'.

However, it's important to note that the Halifax's headline statistics mask regional trends.

The Registers of Scotland recently reported that prices in Scotland were 13.3% higher in the first three months of this year than the same time last year. Many commentators have attributed the sharp rise in prices to the introduction of a Land and Buildings Transaction Tax. Although the first £145,000 of any property's purchase price is exempt from tax, the LBTT now applies a 10 per cent tax rate to homes selling for more than £325,000. As a consequence, local agents reported a surge of activity in the months leading up to the LBTT's introduction on April 1st, as buyers and sellers took advantage of the previous stamp duty regime.

Even within Scotland, there are marked differences in price trends across the country. The most recent price data released by the Glasgow Solicitors Property Centre showed a 4.1 per cent rise in prices across the west of Scotland in Q1 2015, whereas broadly comparable data from Edinburgh Solicitors Property Centre recorded an 18 per cent jump in average selling prices throughout east central Scotland.

The ESPC data may well reflect the introduction of LBTT, but it still demonstrates how national reports like the Halifax House Price Index should only be viewed as a general barometer of market fortunes. That's especially true since UK-wide data has to take into account the overheated London market. National average house prices may provide a useful talking point, as well as a general indication of UK Plc's economic fortunes, but they're unlikely to accurately reflect what's happening in your area. Only local experts can tell you the full story.

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