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Real Estate Perspective - September 2017



Prices continue to rise gradually at a national level against a backdrop of low transaction volumes

3 min read


Annual house price growth*


Annual growth in sales volumes**


Annual growth in new build dwelling starts***

Annual house price growth slows

The Nationwide House Price Index showed modest annual growth of 2.1% in August, signalling a slowdown in growth compared to 2.9% in July. Going forward, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS), headline price expectations remain subdued over the near term, as the UK average reading was weighed down by London and the South East.

The national figure for annual house price growth shows that there are significant variations across the UK. The UK Cities House Price Index produced by Hometrack focuses on 20 of the UK’s largest cities. The latest figures crown Birmingham and Manchester as top performers with 8% and 7.1% annual growth respectively. Conversely, Aberdeen falls to the bottom of the pack with a 3% annual decline in prices.


Sales activity increases but outlook remains flat

Seasonally adjusted statistics from HMRC show that there were 104,760 residential property transactions in the UK in July. The figure reflects a rise of 1.3% in transactions from June and an 8.3% rise since July 2016. However political uncertainty since the EU referendum in June 2016 and the more recent general election continue to shroud the market with a veil of uncertainty.

The RICS survey shows that expectations on sales volumes remain subdued, with respondents on average expecting modestly positive sales over the next 12 months. There has been a sustained decline in fresh listings, with new instructions declining for the 18th consecutive month.

“We believe low interest rates will help activity and support property values overall.”

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Borrowers continue to benefit from lower rates

The Bank of England (BoE) continues to hold interest rates at 0.25%. The slowdown in the economy – driven by inflation, low wage growth and the negotiations over Brexit – have contributed to the BoE deciding to hold interest rates for now. The central bank has said some withdrawal of monetary stimulus is likely “over the coming months” though.

The latest figures from the BoE show mortgage rates falling to a new all-time low. We believe low interest rates will help activity and support property values overall.

Supply remains a challenge for buyers. The RICS survey shows that the average stock levels on estate agents’ books remain close to record lows, limiting choice for potential home buyers.

But this may change as stock of new build property coming to the market is increasing. The latest data from the Department for Communities and Local Government shows that annual new build dwelling starts totalled 164,960 in the year to June 2017, up by 13% compared with the year to June 2016. During the same period, completions totalled 153,330, an increase of 11% compared with last year. Despite the positive momentum, this is still some way off the 250,000 new homes a year that the government has said the country needs.

Next month we launch the Coutts Property Index providing an insight into the prime property market in London. Focusing on 15 areas across London, it will feature a unique online tool to help you understand the market dynamics in your area as well as a full market report on property values.

For more information on any of our lending products please speak to your private banker. If you are new to Coutts please speak to our Business Development team on 0207 753 1365.

If you require further information regarding the residential real estate service we offer, please email Katherine O'Shea.


* Source: Nationwide
** Source: HMRC
*** Source: DCLG

Key Takeaways

Property prices continue to rise slowly while mortgage rates fall to an all-time low. We believe low interest rates will help activity and support property values. Supply remains a challenge but the amount of new build property is set to increase. Next month we launch the Coutts Property Index, which will provide an in-depth insight into the prime property market in London.

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