London propels House Price Growth to heights of 2007, according to Land Registry Housing Data
The housing data for August has shown the price of an average UK property climbed by £1,761 for the month continuing the upwards trend seen in annual price growth for 2014. Standing at 8.4%, annual house price growth has yielded average UK property values of £177,824 ñ a shade under the record high of £181,383 seen in the November preceding the financial crisis.
Representing only a 1% nationwide increase on July, Augustís month-month figures belie the extent to which houses have grown in worth within the capital. Londonís houses rose by 2.7% in value for August, taking annual property price growth to 21.6% for the capital ñ 12.2% up on the average house price growth for the whole UK.
ìAs far as the Land Registry is concerned, the London property market shows no signs of slowing,î said Mark Harris, chief executive of mortgage broker SPF Private Clients. ìPrices rose 2.7% in August and 21.6% over the year, giving an average property price of £476,000.î
With the average price of a London property setting back any potential buyer a cool £467,000, the threat of Labourís proposed mansion tax looms large over the capitalís housing market. Remaining the most sought after locale in the UK, thousands of prospective buyers in London, seeking properties valued at 2m or over, could be wary of being hit with this added levy.
Richard Sexton, director of e.surv chartered surveyors, underlined Londonís role as a spearhead within the property market, catalysing house price growth across the UK.
"The capital is a different species to the rest of Britain. Many other regions have only just found their legs, and are still moving very slowly:" he said.
"Londonís market has already broken free from the rest of the field, with prices thundering forward at twice the pace of the rest of the country. Anything that can help improve affordability in the priciest areas must be considered."
Nonetheless, this growing disinclination within the above group of buyers could be counterbalanced by those seeking properties under £2m within the capital, who through taking advantage of generous mortgage rates, help to buy and a steadying economic climate might aid prolonged stimulation of housing activity for the foreseeable future.
Either way, it is clear the housing market is finely balanced, with various sets of conflicting data highlighting this reality. Reports preceding the Land Registryís monthly housing data indicated that heat was being taken out of the housing market. Hometrack, property research body, recently claimed that house prices had plateaued this September and were falling within the capital - an assertion that seems unthinkable given the pattern of annual UK house price growth for 2014. Hometrack has used a looming interest rate hike and inflated house prices as the basis for its proclamation.
The threat of an interest rate hike has led to increased amounts of fixed rate mortgages being taken out, with borrowers eager to access record low mortgage rates to assuage any long term angst regarding housing costs. Mark Harris, CEO of mortgage broker SPF Private Clients, has encouraged borrowers to act now if they wish to take a measured approach.
"While the Governor of the Bank of England pledged that increases would be 'limited and gradual' borrowers must still plan ahead and ensure they can afford their mortgage now and in the future," he said.
"Five-year fixed rates in particular are good value and provide certainty for the medium-term."
With the Land Registry data suggesting the housing market is showing no signs of slowing up, and other viewpoints, such as Hometrackís, registering a surprise decrease in housing activity, there exists a more moderate perspective whereby house price growth is expected to continue but at a far more gradual pace.
ìDespite the robust Land Registry data, we stick to the view that house prices are likely to rise at a more retrained restrained rate over the coming months,î said Howard Archer, chief economist at IHS Global Insight.
ìWe expect house prices to increase by around 1.5% quarter-quarter in the fourth quarter of 2014 and see them rising by around 6% overall in 2015.î
So, with the housing market finely balanced, no-one is sitting back on their heels. Clamour for more affordable supply within London is vociferous, reflecting both professionalsí and the publicís desire to be proactive in regard to the maintenance of the UKís upwards economic trajectory.
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