30 Sep London house price rises back into double figures, says Nationwide
The north-south divide in house prices increased in the summer, as growth in London moved back into double figures, according to the UK’s biggest building society.
The latest quarterly figures from Nationwide on Wednesday showed that across the UK average prices rose by 1% in the third quarter of 2015, and were up by 3.7% year-on-year to £195,733.
Nationwide’s figures, which are based on mortgages it arranged between July and September, show a marked difference in price growth, and prices, around the country.
In London, which has led the recovery in the housing market in recent years, Nationwide said the annual rate of increase had returned to double figures, moving to 10.6% from 7.3% in the previous quarter.
As a result, the society said the gap between London house prices and the rest of the UK was at its widest ever. At £443,399 the average price in the capital is more than three-and-a-half times the £124,345 paid in the north of England.
The area around London has also seen strong growth, with an annual rise of 9.5% recorded in the commuter belt outside the capital. Prices in the outer metropolitan area average £326,785.
The growing divide in prices shown by Nationwide echoes Monday’s report from the Land Registry for sales completed in August. It showed prices in London rose by 1.7% over the month, while in the north-west they fell by almost as much.
However, the Land Registry data showed that the biggest annual growth took place in the cheapest parts of the London, suggesting buyers are unable or unwilling to stretch to afford some areas.
Nationwide’s figures show that Northern Ireland was the country with the highest year-on-year increase in prices, recording a 6.5% rise since summer 2014. However, at an average of £127,562, prices are still 44% below their pre-crisis peak.
England saw a 6.0%, to £239,842, Wales a 1.9% increase, to £146,854, and Scotland saw a 1.3% fall, bringing prices down to an average of £140,402.
On a regional level the picture was equally mixed, as eight areas recorded a slowdown in the annual rate of growth, while five saw acceleration.
The society also published the latest edition of its monthly index, which showed a price rise of 0.5% in September, and an annual growth rate of 3.8% –.
Nationwide’s chief economist, Robert Gardner, said there were signs that across the UK growth was reaching more normal levels.
“The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth.
“However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.”
Howard Archer, chief UK economist at IHS Global Insight, said he expected house prices to rise by 7% across 2015.
“We expect house prices to see solid increases over the coming months amid firm activity,” he said. “Given that house prices were soft in the latter months of 2014, this is likely to see annual house price inflation on the Nationwide’s measure move higher over the coming months.”
A shortage of homes on the market, as reported in recent months by estate agents and surveyors, could however mean higher growth, he added.