Heat Wave House prices rising by £16,000 a year, data says construction up 3.3% for new build homes

On the hottest recorded day of the year well where I'm typing it's 32C, yes really, in the south of the UK , which has seen house prices continually increase.

 

The price of an average house or flat in the UK rose by £16,000 in the year to May, according to the Office of National Statistics (ONS).The house price inflation rate remained at 8.1%, the same as in April. It brings the average price to £211,000

The figures relate to the period before the referendum on the EU.

The first indication of what may happen in the housing market as a result of Brexit came last week, in a report by surveyors.

House prices are up pre Brexit 

The Royal Institution of Chartered Surveyors (Rics) said that it expected house prices to fall in London and East Anglia in the months ahead.

It also said that demand from buyers had hit its lowest level for eight years.

Economic statement

Continuing price pressures in the housing market have coincided with strong demand indicators relative to supply indicators in recent months. However following higher rates of Stamp Duty Land Tax and Land and Buildings Transaction Tax on additional properties in England, Wales, Northern Ireland and Scotland in April 2016, there are indications that market activity in May 2016 has been more subdued compared to the period before the changes.

The timing of the stamp duty tax seems to have cooled demand in recent months, but this follows an extended period of increases in activity. Following a 6.2% fall on the month in April 2016, the volume of lending approvals for house purchases recovered slightly, by 1.3% in May. However, approvals on a monthly basis are still below the levels seen in the 10 months before the stamp duty changes. Following a strong increase in sales in the month prior to the stamp duty changes (March 2016), UK home sales fell by 42.3% in April 2016 to their lowest level since May 2013; these have only recovered slightly in May 2016. Data from the Royal Institution of Chartered Surveyors (RICS) also suggests that buyer demand fell for the second consecutive month in May 2016, with the rate of contraction in demand the fastest since mid-2008. New buyer enquiries declined across most parts of the UK with regional variations in conditions.


Indicators of supply in the housing market were more mixed. The Bank of England’s Agents’ Summary of Business Conditions for May 2016reported a shortage of newly built and secondary market housing supply. 

RICS also reports that general supply, as measured by new instructions to sell, experienced a broad based fall in May 2016.

Agents' Summary of Business Conditions, May 2016

Key Resources Bank of England

​Introducing the Agents' Scores
By Colin Ellis and Tim Pike, Quarterly Bulletin, Winter 2005

Bank of England Agents' Scores

Definitions for the Agents' Scores

In contrast, the latest ONS Output in the Construction Industry release indicated that new-build housing output increased by 3.3% in the previous three months (February to April 2016) compared to the same period a year earlier. However, there may be a lag before this new build supply affects market conditions more generally.

Further reading 

New Housing Minister , Secretary of state welcomed into Parliament under Theresa May 

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