Annual house price and rental growth remained around the 10% level in the wider South East in Q2, broadly continuing trends from earlier this year and staying in line with national trends.
Looking locally, price growth remained high for most districts, with the biggest rises in areas further out from London.
South East sales market
The annual rate of house price growth across the wider South East fell slightly in Q2 but remained at a very high level, according to the latest Nationwide index results, shown in Table 1. Figure 1 below that shows the trend back to 2007 – the combined wider SE measure fell back slightly from its Q1 peak.
Table 1 – Regional House Prices, Q2 2022
Outer South East
Source: Nationwide House Price Index (values rounded to £1000)
Figure 1 – House Price Growth: Wider SE, London and National
Source: Nationwide (Wider SE represented by average of ‘Outer Met’, ‘Outer SE’ and ‘East Anglia’ areas). Note: Quarterly regional series uses different UK figure to main monthly index
The ratio of London values relative to the wider South East increased slightly in Q2, reaching 1.51 after last quarter’s trough of 1.50. Overall, the trend since Q4 2015 has been for this ratio to decrease, so it will be interesting to watch out for further increases in coming quarters and see if the reversal continues. The full data series is shown in Figure 2.
Figure 2 – Ratio of London to Wider South East Values
Source: Nationwide. (Wider SE represented by average of ‘Outer Met’, ‘Outer SE’ and ‘East Anglia’ areas)
The map below shows annual house price growth at local level across London and the wider South East. 80 of the 109 non-London districts are in the top 10%+ growth band, with only one below 5% (Slough). Of the 33 London boroughs, four recorded growth over 10% with 15 under 5%, although there were no price falls in the year to May (compared to four in our previous update). Fenland in Cambridgeshire recorded the highest rate of annual growth at 18.5%, followed by Broadland and Mid Sussex.
Figure 3 – Annual House Price Growth at Local Authority Level, May 2022
Source: Land Registry, 3-month smoothed data
South East rental market
Figure 4 shows rental growth data at regional and national level from the ONS. This is based on all rents paid so is slow to respond to changes in market conditions. The rate of annual rental growth increased nationally and in all southern regions in Q2. The East continued to see the fastest growth on this measure, with an annual rate of 4.0% in June, with the South East at 3.3% also ahead of the national average (2.9%). Growth in London improved to +1.7% but it continued to lag the other regions.
Figure 4 – Rental Growth: Southern regions, London and National
Source: ONS Index of Private Housing Rental Prices
Analysis based on new lettings showed significantly higher levels of rental growth than the ONS indices, with London seeing the largest rises. The pace of growth increased across all southern regions in Q2 based on both Homelet’s June index and Rightmove’s latest data.