UK prices tick up in January as deal numbers recover – Knight Frank

PCL demand on the up as the pace of price drops slows

Average UK house prices tickled up by 0.2% in January, says Knight Frank, taking annual growth to +4.3%. Property values in Prime Central London, meanwhile, continued to fall – but the pace of those drops has slowed a bit as demand picks up.

PCL’s average price edged down by 0.3% in January – that’s the smallest drop since last July – leaving the annual change at -6.7%. But transactions here are on the up: Knight Frank reports more done deals in Q4 2016 than in the same period in either 2015 or 2014. The rest of London, however, presents a very mixed localised picture, with outer boroughs seeing the best of the price growth…

Outside of the capital, prime country house values dipped marginally through last year, falling by 0.4% – but again, the market is very localised. Prime regional cities have continued to out-perform the averages, with Oxford (+1.8%), Cheltenham (+7.5%), Bath (+3.5%) and Bristol (+5.5%) worthy of particular note. Knight Frank’s Bristol operation, for example, saw new buyer enquiries jump by 30% in 2016 compared to 2015, with viewing numbers rising by 35% over the same period.

Turning attentions to stamp duty – which were not touched upon in the government’s recent Housing White Paper – and it appears that the bumpy ride since 2014’s top-end-clobbering reforms might be coming to an end. The Treasury’s SDLT take was on a consistently upward trajectory through the last 12 months, helped in no small part by the 3% surcharge on additional homes.

Deal numbers also picked up towards the end of the year, with buyers and vendors seeming to finally accept – or at least factor in – higher transaction costs in the upper value brackets.

All this – combined with positive news on the wider economy, as the Bank of England raised its economic growth forecasts for the UK for 2017 and 2018 – means that the property sector is looking relatively bright: The Knight Frank/Markit house price sentiment index hit a post-Referendum high in January..