New property price data shows robust rises over the last year, but why are the monthly figures so erratic?

Figures very pleasing for expat property owners

House prices in the three months to April were 5% higher than in the same three months a year earlier, a robust and surprise increase in a market that had been considered muted.

The average UK house price now stands at £236,619.

On a monthly basis house prices were up by 1.1% in April, compared to a fall of 1.3% in March.

Are buyers throwing off the Brexit shackles, or is the recent volatility in the monthly data indicative of something else?

Skewing the figures

This month’s figures were driven by a higher volume of London sales and more expensive new build properties.

In a market where stock and overall transactions are lower, any change within the make-up of the data can have a disproportionate effect and skew the figures.

The index has already come under scrutiny this year after months of erratic monthly growth figures. These can be sprightlier than the smoothed annual and quarterly numbers, but even so, they’ve been turning heads with the extremes with which they have been moving.

By this measure for April, the housing market is still comfortably making money for homeowners in real terms.

One explanation for ricocheting growth figures like this is persistently low stock levels. In sought after areas, this can lead to demand being supercharged one minute and gone the next, with price rises coming in waves as brief competitions for limited numbers of homes come and go.

Long-term growth

What is reliable is the longer-term growth trend. It’s now 10 years since the lowest point of the house price index in the wake of the financial crisis in April 2009 – and average prices have bounced back. Over the past decade annual house price growth has seen the average price increase by £81,956, or an average rise of 4.3% each year.

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