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London’s ‘cooling’ property market up 21.6% a year

Posted by: In: Real Estate 26 Sep 2014 Comments: 0 Tags: , , , , , , , , , , ,
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Real estate values in England and Wales rose 8.4% in the year to August, led by London, Land Registry data shows, but a Hometrack survey suggests London values fell 0.1% in the month to September

Property prices in England and Wales jumped 8.4% year-on-year in August, led by annual London values at 21.6% – confounding reports of a cooling market.

The figures from the Land Registry are the highest average national rise for almost seven years.

Meanwhile, a conflicting survey of agents and surveyors across England and Wales from agency Hometrack says London prices fell 0.1% in the month to September.

In the last month alone, England and Wales prices rose 1% to £177,824 just £3,559 off the November 2007 peak, while London values were up 2.7% on the month, according to Land Registry data.

Jonathan Hudson, Managing Director of West End-based Hudsons Property, tells OPP Connect, “London is well beyond the average price in 2007, but it is interesting to see the rest of the country is almost there too. However, with London and the South East making up the majority of the average prices, it shows some parts of the UK are someway adrift, still more so than this figure suggests.

“The annual 8.4% increase in August will be from transactions agreed a few months earlier, so it will be interesting to see how these figures match up in a few months’ time, due to a drop in buyers in the last quarter compared to the recent boom years.”

North East recorded the lowest annual price growth of 3% and the South West and North West saw monthly falls of 0.1%.

Repossessions fell 36% in June 2014 to 794 compared with 1,238 a year ago.

“Repossessions are likely to happen, whilst it is proven that some areas in the UK are still struggling with regards to getting close to the average price of 2007. That said, with the economy moving in the right direction, and with stricter lending, hopefully repossessions will decrease further,” Mr Hudson adds.

Other market commentators say London demand and prices are cooling and the Land Registry data shows that some areas, including Windsor and Maidenhead and South Yorkshire, have seen month-on-month falls.

In fact, Hometrack’s September National Housing Survey says that for the first time for 19 months there has been zero house price growth in England and Wales and a fall of 0.1% in London.

Continued weakness in demand, which fell by 2.1% in September, led to a pronounced slowdown in market activity, with continued declines in asking prices being achieved as buyers have been deterred by talk of rising interest rates, the general election and the Scottish referendum.

London was the only region to record a monthly price fall in September – of just -0.1% – with further modest price falls likely in the months ahead.

Richard Donnell, Director of Research at Hometrack, says, “There’s a distinct chill in the air this month: after a strong run over the last 18 months, the momentum of house price rises has started to turn with growth now at a standstill for the first time since January 2013.

“While this slowdown can be attributed partly to seasonal factors – including a slight hangover from a slow August – it’s clear that agents are wary about the direction of the market as a result of weaker demand and lower sales volumes.

“Buyer uncertainty is growing in the face of a possible interest rate rise, a general election on the horizon and recent warnings of a house price bubble. The debate over economic implications for

Scottish independence could well have added to the uncertainty in recent weeks.

“Played out against a backdrop of tougher mortgage affordability checks and limits on high loan to income lending, higher value postcodes of inner London are clearly being impacted.”

There are many home owners who do not need to sell unless it is financially beneficial to do so. The net result is a likely drop-off in activity in the coming months, Mr Donnell says.

“As the build up to the election in 2015 draws imminent and political parties use the conference season to delinate their views, we anticipate an impact on market activity.”

Hometrack’s national monthly housing market survey is based on a monthly survey of estate agents and surveyors across all postcode districts across England and Wales.

By Adrian Bishop, Editor, OPP Connect
Twitter: @oppnews

Source:: OPP

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