Rampant London defies house price slowdown
Sun 29 Jun 2014
England and Wales are locked into a two-speed housing market with London prices up 18.5% in the last year, while prices are still falling in parts of the North. Although prices overall jumped 6.7% over the 12 months to May 2014, this was primarily driven by London, where prices rose 2.5% in May. In Yorkshire & the Humber, prices actually fell 0.9% last month, according to figures from the Land Registry. The North East saw the lowest annual price growth, up just 0.9% from a year ago The average house price in England and Wales is now 172,035. This is still below the peak of 181,518, recorded in November 2007. Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said London house prices are far ahead of the curve, with no other region across England and Wales even approaching double-digit growth. "Prices appear stable across much of the Midlands and the North, which will give renewed hope to first time buyers that buying property is still a realistic ambition. "Many of the sales using Help to Buy equity loans and mortgage guarantees have been focused in these regions, allowing better access to mortgage finance without pushing house prices further out of reach." Murphy said London is in need of "special measures", but warned that recent moves by the Bank of England crackdown on lending to limit borrowings will do nothing to deter cash buyers, foreign owners and buy-to-let landlords. "These don't rely on mortgage finance but are still a major influence on rising prices." Nicholas Ayre, managing director of buying agency Home Fusion, said that sentiment is changing outside London as buyers are taking more time to consider a purchase before taking the plunge. "Bank of England governor Mark Carney has made it clear that interest rates will go up sooner rather than later so buyers are rightly asking whether they can they afford the property now and also in a year's time when rates could be higher. "Even a 0.25% rise will make a difference. It may not sound like much but that's a 50% jump from where we are now so it needs to be taken seriously." Buyers are taking heed of the property market warnings, said Peter Rollings, chief executive of Marsh & Parsons. "Any good property will still march out the door but anything unusual will take longer to sell." After a busy start to the year, price growth is beginning to slow, as fresh supply of property comes on to the market, he said. "Land Registry figures show the average house price now stands at 172,035, down from 172,069 in April, demonstrating the self-regulatory nature of the market as it returns to normal. "Not only does this give buyers some breathing space from the fierce competition experienced earlier this year, itis also good news for sellers who now have more choice for their onward purchase. "London, where property is still in much higher demand, continues to be in a league of its own and unrepresentative of the UK market as a whole. "However, the figures for April show a natural levelling off of the market with a monthly price increase of 2.5% compared with 4.2% in April."