15 Sep London and South East skewing average house price figures, latest index shows
The average property price in England and Wales has reached £274,302 but this drops to £185,496 if London and the South East are removed, the latest monthly index shows. This means that these two regions are skewing average house prices by a record £89,000, the biggest disparity since 1995, according to data from the LSL Property Services index.
It is due to cooling house prices in some regions and the figures shows that the slowdown outside of London and the South East on an annual basis has dropped to 4.3%. This contrasts with average house price growth of 10.7% in the past year across all of England.
On a monthly basis prices have increased by 0.9%, according to the data from the August index report.
According to Richard Sexton, director of e.surv chartered surveyors, part of LSL Property Services, a game of two halves is being played out in the UK property market.
‘In terms of average house price growth, a gap has developed between the South East corner and the rest of the country. If we exclude the key players of London and the South East from the game, a whole different playing field is revealed,’ he said.
‘House prices across the remaining parts of England and Wales have only increased 4.3% in the past year, or less than half of the overall measure of 10.7% when we include London and the South East. In absolute terms the difference would seem to add £88,806 to the average price tag for a home across England and Wales, the highest absolute difference since 1995,’ he explained.
‘This obscures cooler prices in much of the country. Further afield, it is critical that support mechanisms like Help to Buy aren’t dismantled. In July, house price growth slowed across all regions except for London, the South East and East Anglia. While these three regions continue to set new house price highs, the rest of the country is nowhere near these levels of growth,’ he added.
Sexton also pointed out that compared to the nadir of 2008/2012, activity in the housing market has improved, but is not completely out of the woods yet, and still needs to recapture some of the vitality of its pre-recession health.
‘There is also much more to be said beyond the headlines for London. The annual rate of growth in London house prices is the fastest witnessed since 2000. Most recently we’re seeing asking prices in the capital start to be reined in, which will apply the brakes on annual house price inflation as the market steadies,’ said Sexton.
‘What’s happening in London may be eye-catching, but it is akin to looking through a kaleidoscope and skews any view of the current total housing landscape. Peeling back the regional layers gives a much more informed view of the core reality of the current housing market,’ he added.
‘With evidence of London starting to cool off after strong growth earlier in the year, it is critical that the underlying momentum that has stimulated much needed increased volume in the rest of the market is allowed freedom to keep moving, whilst any price rises are kept steady and under control,’ he concluded.