29 Oct England and Wales property prices up again, with average in London reaching half a million
Property prices in England and Wales increased by 1% in September, taking the average house price to £186,553, according to the latest Land Registry data.
Year on year prices have increased by 5.3% but in London it is much higher at 9.6% year on year and 1.8% month on month and the average price in the capital city is now a record £499,997.
The North East saw the only annual price decrease of 0.3% and also saw the only monthly price decrease with a fall of 0.3% as well.
But sales are down. From April 2014 to July 2014 there was an average of 78,330 sales per month but in the same months a year later, the figure was 71,766.
The data also shows that the number of properties sold in England and Wales for over £1 million in July 2015 was down 9% year on year and in London it was down 16%.
Jonathan Hopper, managing director of the buying agents Garrington Property Finders, said it was inevitable that the average property price in London would reach half a million pounds.
‘Prices in the capital have been marching relentlessly upward in all but the top tiers of the market, as strong demand collides with a sustained shortage of supply. But the average London property price won’t stay at £500,000 for long. Bullish sentiment has driven annual price inflation in the capital close to double digits again, and the half million mark could soon be forgotten,’ he explained.
He pointed out that the price gains are steadily rippling outwards from London, with both the South East and East of England posting annual rates of growth of over 8%, but England’s North-South divide remains as strong as ever.
‘Even though the North West has reversed the sudden month on month drop in prices it saw in August, prices in the North East of England have slipped back into negative territory. By contrast much of the South and East looks like one giant hotspot, as the national picture returns firmly to type,’ he said,
But he believes that rising prices should not be confused with sound health in the property market. ‘The shortage of supply is endemic in several areas, and the current rate of demand can never be completely met. Yet for all the competition among buyers, most remain astute in their offering behaviour and sellers shouldn’t be tempted into thinking it’s an exclusively sellers’ market,’ he added.
A sense of balance is appearing in the market, according to Nicholas Leeming, chairman of high end national estate agents Jackson-Stops & Staff. ‘London continues to drive forward but we’re now seeing emerging boroughs such as Newham and Hounslow enjoy strong growth, while traditional performers such as Hammersmith and Fulham begin to wane,’ he said.
‘There still remains a stand-off between buyers and sellers at the top end of the market, with neither party prepared to accept the higher cost of stamp duty. Outside of the capital, it is encouraging to see six of the nine regions experience positive growth within 1% of each other, reflective of the burgeoning local economies and infrastructure improvements that are helping to increase connectivity,’ he added.
Weak supply is driving the market price growth, said Rob Weaver, director of investments at property crowdfunding platform Property Partner. ‘The lack of property coming onto the market, coupled with the lack of new homes being built, is applying upward pressure on prices. Supply may have gone AWOL but demand is still very much there,’ he explained.
‘As has happened so often in the past, London was once again the standout performer, delivering much stronger growth than any other UK region. That average prices in the capital are just a whisker off half a million pounds reinforces how buying in the capital has become a pipe dream for most first time buyers,’ he added.
He believes that the clear message emerging from the data is that the supply issues needs to be addressed and innovative solutions are needed both from the Government and private sector alike.
John Eastgate, sales and marketing director of OneSavings Bank, pointed out that annual price inflation reached a six month high in September but while this may be good news for sellers there is little respite for first time buyers, who struggle with the need to match higher house prices with larger deposits.
‘Strong mortgage lending figures have so far been supported by year on year growth in remortgage activity, so this acceleration in house price inflation may yet further impact on the purchase market,; he said.
Most of the growth is coming from a shortage of homes for sale, according to Peter Rollings, chief executive officer of Marsh & Parsons, especially the more affordable end of the London market.
‘This will only escalate with an anticipated rise of interest rates in the New Year. Conversely, sales activity is looking decidedly cooler and the million pound plus market is yet to thaw out and get moving again since suffering the repercussions of more stringent stamp duty,’ he said.
Lora Roberts, portfolio manager at Ascend Properties, believes that it is highly encouraging to see the North West enjoy the same monthly price growth as the south east, a feat that would have been unheard of 24 months ago.
‘We’re now seeing six of the nine regions outside of the capital enjoy positive monthly growth within one percent of each other, reflective of strengthening local economies and a paradigm shift that shows London and the south are starting to have stiff competition,’ she said.