The Times: Sharp Price Rise Masks Slower Homes Market
Wed 19 Nov 2014
By Philip Aldrick, Economics Editor
House prices rose at the fastest rate for more than seven years in September despite indications that the market has started to cool.
Average prices were up 12.1% in the last 12 months to September, a bigger increase than at any point since Juy 2007. London again fuelled the increase, with annual prices in the capital climbing by 18.8%, figures from the Office for National Statistics (ONS) indicated.
The sharp annual increase in prices in the capital masked a fall in the month-on-month figures. Savills, the estate agent, warned that London prices could now slow before the election, with the threat of a mansion tax on properties worth more than 2 million if Labour wins in May.
"The general election and the potential implementation of a mansion tax thereafter has had the expected subduing effect on buyers," Savills said, noting that the main focus of demand was in the "sub-2million market."
The average London house price is 508,000, compared with 273,000 for the UK as a whole. Average prices in the capital fell 1.1% between August and September.
Housing market indicators such as the number of mortgage approvals have been pointing to a slowdown in growth for a few months on the back of stalling buyer demand and the ONS appeard to confim that the market was coming off the boil.
Average house prices rose by only 0.5% from August to September, in the equal second-weakest performance this year. The ONS added that it had seen average prices "in a number of regions fall back from the record levels witnessed in August 2014." Only prices in the east of England were still at record levels.
Peter Rollings, chief executive of the estate agents Marsh & Parsons, said,"The legs of the house price growth are certainly feeling the effects of the rapid uphill sprint at the start of 2014. Values have retreated back from peak levels in the majority of regions across the country."
Barclays said that the figures were "consistent with a gradual slowdown in house prices."
Figures this month from the mortgage lender Nationwide added to evidence of a slowdown, as the annual rate of price growth fell to 9% in October from 9.4% in September. First-time buyers face tougher conditions, the ONS data showed. Prices for new entrants rose 13.3% over the year, compared with 11.5% for existing buyers. Outside London and the southeast, UK house prices rose by 9.1%.