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UK house price inflation remains elevated in Q2

Staff Writer |
UK house prices increased by 1.8% during the second quarter of 2016 and were up 8.5% compared to the same period a year earlier.

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This is according to the latest quarterly data from the Halifax House Price Index, administered by Markit. Q2’s price inflation meant the standardised UK property price rose to a record of £215,582 (from £211,868 in Q1 2016).

The annual increase of 8.5% during the second quarter was the lowest recorded since Q3 2015.

However, house prices have now risen on a quarterly basis for 15 successive quarters, and prices are also up some 36.6% since the height of the financial crisis in the spring of 2009.

Considerable regional variations in terms of both house price inflation and standard house price levels continued into the second quarter of 2016.

London, followed by the South East, remain by far the most expensive areas to purchase housing, with the average house price in the capital currently pushing close to £450,000 according to the Q2 data.

With London prices now close to four times the average price paid in the area of the UK with the lowest house value – currently Northern Ireland at £119,000 – the gap between the most expensive and cheapest regions is at a new record of just shy of £330,000.

That said, in a sign that April’s stamp duty changes have perhaps taken some heat out of the London market, prices were unchanged in Q2, following a 7.2% rise in the previous quarter, though remained well up on a year earlier (14.6%).

Along with the South East (13.9%), house price inflation in London was the strongest seen in the UK.

Outside of these two regions, no others recorded double-digit house price rises with most registering considerable slowdowns compared to the previous quarter.

Scotland (-1.6%) and Wales (-0.6%) both saw modest year-on-year falls in house prices, while the rate of inflation in Northern Ireland fell sharply to just 3.5%.

Moreover, house prices in Northern Ireland are still some 48% down on their peak seen in Q2 2007, while in Wales they remain close to 10% down on pre-financial crisis levels and Scotland some 6.4% down.

Other regions currently recording house price levels below pre-financial crisis highs include the North (-6.9%) and the North West (-2.5%).