Property price gap at record level

Thurrock Gazette: Across the UK, house prices rose by 9.5% year-on-year Across the UK, house prices rose by 9.5% year-on-year

London house prices have leapt by 18.2% annually, widening the gap between property values in the capital and those in the rest of the UK to the largest levels on record , building society Nationwide has reported.

Across the UK, prices rose by 9.5% year-on-year, which is the biggest jump in almost four years and takes the typical property value to £180,264, amid signs that the upturn in the market is gaining momentum across the country, the report for March said.

P roperty values rose by 0.4% on the previous month across the country and are still around 3% below their 2007 peak.

But the southern regions in particular are continuing to record "the most rapid" gains in property values, the report said.

Prices in the Outer South East areas were up by 10.1% year-on-year, reaching £217,534 on average, while those in the Outer Metropolitan areas rose by 10.6% to around £273,998.

The annual rate of price growth in London is the strongest seen since 2003, Nationwide said. The typical house price in the capital is £362,699 - which is one-fifth (20%) higher than its 2007 peak.

Robert Gardner, Nationwide's chief economist, said: "The gap between house prices in London and the rest of the UK is the widest it's ever been, both in cash and percentage terms.

"Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South East have now surpassed their pre-crisis peaks.

"Similarly, East Anglia and the South West are less than 5% below their 2007 highs."

Concerns have been growing that a lack of supply of homes combined with strong interest from overseas investors and a fresh stream of first-time buyers into the market amid low mortgage rates and Government mortgage support schemes such as Help to Buy have been helping to pump up property prices, particularly in the capital.

Mr Gardner said the upturn in the supply side of the housing market generally "continues to lag far behind", with the number of new homes being built in England still around 40% below pre-financial crisis levels.

Nationwide's figures also show that prices in Northern Ireland are up by 5.4% annually to reach £114,495 on average, although prices there are still around half their 2007 levels.

Prices in Wales have risen by 5.2% annually to £139,911 typically, with Wales recording the weakest annual growth across the UK regions.

Property values in Scotland are 7.6% higher than a year ago, at £138,386 on average, which is the strongest pace of growth seen for the nation since 2007.

Prices in the South West have jumped by 7.4% year-on-year to reach £198,325 typically. In the North, values edged up by 5.9% annually, taking the average price to £119,702, making it the weakest English region for house price growth. In East Anglia, values rose by 9.5% year-on-year to around £179,718.

Among England's major towns and cities, Manchester was found to be the strongest performer, with house prices up by 18% annually to £211,748 on average. Sunderland was the weakest-performing, with prices edging up by 1% to £139,772 typically.

Matthew Pointon, a property economist at Capital Economics, said that while the surge in demand generally from buyers who have previously struggled to get on the housing ladder is perhaps showing signs of running out of steam, "London doesn't appear to have got the memo" when it comes to house price growth easing.

He said: "London is looking far more like a bubble - prices are up over 18% year-on-year in the capital, the fastest rate since the start of 2003.

"An improving economy and labour market will help house prices make further gains over the remainder of the year.

"But prices are already very high in relation to earnings, and banks are taking a relatively cautious approach about who they lend to.

"Therefore, at least outside central London, it is unlikely that growth will accelerate towards dangerous levels."

Melanie Bowler, an economist at Moody's Analytics said that mortgage rates hit a record low towards the end of the last year, but they "have likely troughed" as the Government's Funding for Lending scheme, which has helped households to borrow, has now been re-directed towards helping businesses.

She said: "Interest rates are not forecast to start rising before mid-2015 but the Bank of England will remain vigilant about an overheating housing market and has a number of options, including introducing lending limits on banks, should worries threaten financial stability."

Comments (1)

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6:49pm Wed 2 Apr 14

tyker2 says...

gazumping is back as is the sealed bid process. Houses on south east selling for more than asking price. An average 3 bedroomed house n Hampshire on the mainline to London are now selling for in excess of £300k with demand far outstripping sales
gazumping is back as is the sealed bid process. Houses on south east selling for more than asking price. An average 3 bedroomed house n Hampshire on the mainline to London are now selling for in excess of £300k with demand far outstripping sales tyker2
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