The homes that earn more than the owners... and it's tax-free! London prices soar 18%
Tue 15 Apr 2014
The homes that earn more than the owners... and it's tax-free! London prices soar 18% in a year
Full-time worker in the capital earned 35,250 before tax last year. Average home increased in value by 63,000 - ONS sayPrice of a London home rocketed by 17.7 per cent in a year. The average London home earned more than its owner last year as prices rose by nearly 18 per cent, official figures show.
A typical full-time worker in the capital earned 35,250 before tax last year but the average home in the city increased in value by 63,000 tax-free. The Office for National Statistics figures come amid warnings that only the wealthy can afford to buy a home inLondon, where prices have rocketed by 17.7 per cent in a year. This is the biggest percentage increase since July 2007, a month before the credit crunch began. Chris Walker, of Policy Exchange, a think-tank favoured by David Cameron, said: Buying in London is increasingly becoming the preserve of the wealthy. Housing charity Shelter said the ONS figures provided yet more evidence that house prices are spiralling out of control. Martin Beck, economic adviser to accountants Ernst & Youngs ITEM Club, said: While we remain of the view that UK house prices in general are not yet seeing unsustainable growth, the London market is looking particularly frothy. He added: The onus remains firmly on the Bank of England to ensure that the market does not enter bubble territory.
The average home in London costs a record 458,000, and a mad rush to buy has been forcing people to put in offers far over the asking price, submit sealed bids and gazump rivals. By comparison, a home in the North East the cheapest region of England has risen in value by just 3,000 over the last 12 months to 146,000. Across the UK, the average house price is 253,000, but that figure drops to 196,000 if London and the South East are excluded.
Peter Rollings, chief executive of estate agent Marsh & Parsons, said there was insatiable demand from both UK and overseas buyers. A home in London has become an unshakeable pillar of investment for many foreigners, he said, with property in the city seen as a safe global reserve currency. More than a quarter of prime homes in London are being sold to people who live abroad, analysis by estate agents Knight Frank shows.
The ONS said house prices are increasing strongly across most parts of the UK, with 9.1 per cent growth over the last 12 months the biggest annual increase for nearly four years. It represents a huge change from the worst of the recession, when house prices fell every month from July 2008 to October 2009. Estate agency Haart said it was having to hold open houses when potential buyers all look round a home on the same day in order to cope with unprecedented demand and acute stock shortage. Paul Smith, its chief executive, said unabated demand for homes in London and the South East is spreading across the country. He warned of a logjam caused by a shortage of properties for sale. As many as 30 clients at each branch of Haart say they would move if they could find a property to move to, he said.
Last week, the Royal Institution of Chartered Surveyors announced its members expect house prices to rise by 6 per cent a year for the next five years. It warned of a chronic shortage of homes nationwide, particularly in certain hotspot areas. Housing minister Kris Hopkins commented: This Government is committed to delivering long-term economic stability and growth. The last administration oversaw a housing boom and bust and this Government has been picking up the pieces.
Campbell Robb, chief executive of Shelter, said: The figures are yet more evidence that house prices are spiralling out of control. Apart from the lucky few who can rely on the Bank of Mum and Dad, our runaway housing market is forcing a generation to watch a home of their own become an increasingly distant dream, no matter how hard they work or save.