A study by Halifax has revealed the staggering long-term increases in London house prices.
Property prices per square metre have risen by 432 per cent in Greater London over the past two decades. This compares to a national average increase of 251 per cent, or £2,216 per square mile.
Solihull and Leamington Spa in the West Midlands, Altrincham in the North West, Edinburgh in Scotland and Harrogate in Yorkshire have also seen a bigger rise than the national.
The findings are published on the day Halifax’s monthly house price index shows average property values in the three months to May were 1.4 per cent higher than the previous quarter, reports Reuters.
According to the figures, prices rose by 0.6 per cent in May, twice the rate forecast in a poll of economists and largely reversing a 0.8 per cent dip in April, which followed buy-to-let landlords rushing to buy property before that month’s stamp duty hike.
The annual rate of growth is unchanged at 9.2 per cent, almost double that recorded in a Nationwide index earlier this month, which continued to see price growth slowing.
“Low interest rates, increasing employment and rising real earnings continue to support housing demand,” said Halifax housing economist Martin Ellis. The cocktail of high demand and low supply is causing house prices to rise “at a brisk pace in quarterly and annual terms”, he added.
However, Jeremy Duncombe, the director of the Legal and General Mortgage club, sounded a note of caution on behalf of those yet to join the housing ladder.
“Whilst some may view rising house prices as something to cheer about, this relentless climb is actually bad news for aspiring homeowners across the country,” he told City AM.
But Halifax does join others in forecasting a stabilising in the months ahead.
Ellis says: “Increasing affordability issues, caused by a sustained period of higher-than-earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses.”
Average London house price passes £600,000 for first time
The typical price paid for a house in Greater London has inched past the £600,000 milestone for the first time, according to new analysis of Land Registry data.
The property investment firm London Central Portfolio [LCP] says the new average of £600,076 is 14 per cent higher than a year ago, a rise of almost eight per cent on the previous quarter. Unprecedentedly low mortgage rates and the falling cost of stamp duty on properties costing less than £937,000 are combining to ramp up both demand and prices in the capital.
The picture is quite different in the rest of the country, where average prices have dropped almost one per cent quarter-on-quarter to £235,844. There has also been a fall in the number of sales – these sank 4.5 per cent quarter on quarter.
“Recent price appreciation reflects the reduction in mortgage rates which are at their lowest rate ever,” LCP’s chief executive Naomi Heaton told the [1] Daily Mail. “It is also a response to the reduced tax burden, with the new graduated stamp duty reducing acquisition costs for average buyers.”
Speaking to the [2] Evening Standard, she describes the recent rise as a “one-off anomaly, likely to be steeply eroded next quarter”.
Looking ahead, Heaton predicts that “continued volatility of global equity markets, suppressed oil prices and economic upsets across the Middle East and China” mean growth will stagnate in the capital. She says that the fall in prices and sales across the rest of the country “must give cause for concern” given recent government initiatives.
London estate agent Jeremy Leaf also forecasts that prices will “soften a little” in central London, adding that the “rush in activity in the earlier part of the year was largely down to investors and second home buyers moving forward their purchases to beat the stamp duty hike at the start of April”.
House prices will be affected ‘for years’ by EU vote
Regardless of the outcome, the EU referendum “could determine the fate” of house prices “for several years to come” one property market expert has said.
Mark Posniak, the managing director at Dragonfly Property Finance, told the BBC the market is caught between squeezed affordability after an extended period of price gains and some of the cheapest mortgage borrowing costs there have ever been.
But, he added, it is “hard to deny is that the result of the EU referendum could have a material impact on house prices in the short to medium term”.
Posniak was commenting in the wake of latest monthly figures from Nationwide, which showed house price growth continued to cool in May. Year-on-year increases dipped following the rush in the first quarter of his year among buy-to-let investors to beat a stamp duty hike.
The average house price rose by 4.7 per cent in May, down from 4.9 per cent in April and 5.7 per cent in March, the lender reported. This is still well in excess of wage growth and Nationwide estimates the average home in the UK is now worth £204,368.
Where prices will go in the short term has become a key issue in the EU referendum campaign – although it is the interpretation of the consequences, rather than the trend itself, that is fuelling competing arguments.
Remain campaigners say home values will decline markedly – the Treasury has said between ten and 18 per cent in just two years – as a result of a hit to economic activity and inward investment. Howard Archer, the chief UK and European economist at IHS Insight, told the Daily Mirror that “heightened uncertainties… would likely weigh down heavily on the housing market”.
Brexit supporters do not generally contest this and argue instead that house prices are too high and rising too fast for first-time buyers to be able to get onto the housing ladder. Tory MP and House of Commons leader Chris Grayling told The Guardian that younger voters should consider the negative consequences of further house price gains if the UK were to remain in the EU.
“It is already tough to buy a house,” he said. “But if we are bringing a population the size of Newcastle upon Tyne into the country every single year, if we cannot set limits on the number of people that come and work in Britain, then simple maths says it is going to be even more difficult to get on to the housing ladder.”
House prices in seaside towns rise £440 a month
31 May
House prices in Britain’s seaside towns have risen by around a third over the past decade, growing in value by roughly £440 a month, according to new figures from Halifax.
Using figures from the Land Registry and the Registers of Scotland to track price trends across 196 coastal areas, the lender calculates that average prices have increased by 32 per cent, up from £166,565 in 2006 to today’s £219,386.
The fastest growth has occurred north of the border, notes the Daily Mail, where 19 of the 20 towns with the biggest gains are found. Fraserburgh, in Aberdeenshire, has seen the largest increase, with house prices rising by 139 per cent since 2006, from an average of £63,540 to £151,719. Lerwick, in Shetland, and Aberdeenshire’s Macduff have also seen triple-digit percentage growth.
But it’s important to see this in context. The BBC says that these properties came from a lower starting point and remain on average much cheaper than those south of the border, with Scottish towns “dominating” the lower reaches of the table in terms of cash value.
Average house prices in Scotland’s most expensive seaside town, North Berwick, for example, are £327,124 – less than half the £664,655 needed to buy a house in its English equivalent, Sandbanks, in Dorset.
Eight of the top ten most expensive seaside towns are in south-west England – they include Padstow, Dartmouth, Fowey, St Mawes and Wadebridge.
While the report reflects that “seaside towns are highly popular places to live”, says Halifax, the Daily Mail reports that average growth across these 196 locations has failed to keep pace with the gains in broader UK house prices over the past decade.
“The typical price tag of a UK home has grown from £183,751 in 2006 to £262,634 in 2016 – the equivalent to an average increase of £657 per month,” the paper says. These figures could be “heavily skewed” by London, where prices were recently reported to be above £600,000.
This extended period of rapid growth may well be coming to an end, however. The Financial Times cites the latest survey from the Royal Institute of Chartered Accountants, which shows the second-fastest fall in new-buyer enquiries since 2008.
Property experts are also sounding a cautious note, with Haart, the UK-wide estate agent, saying: “We believe the nation has now neared the limit in terms of price rises.”
SOURCE: The Week
