House prices hit a new record high in August but the booming London market showed signs of slowing down, figures revealed today.
The average cost of a home in Britain rose by 0.6 per cent during the month to stand at £274,000, according to the Office for National Statistics.
The annual rate of growth was unchanged from the previous month at 11.7 per cent, as the housing market recovery continued to ripple out across the country.
London remained the key driver of growth, with prices in the capital soaring by 19.6 per cent year-on-year.
But property values in London dipped by 0.1 per cent during the month to stand at £514,000 or 39.5 per cent above their pre-crisis peak.
In the South East and the East annual house price growth picked up slightly to 12.3 per cent and 11.6 per cent respectively, while it was 9.6 per cent in Northern Ireland and 9.3 per cent in the South West.
But growth was more subdued in other regions, with prices edging ahead by just 3.8 per cent year-on-year in the North East, while they were 4.7 per cent higher in Wales and 5.6 per cent up in the North West.
Property values are now above their pre-crisis peaks in London, the South East, East, South West, East Midlands and West Midlands.
“For six regions of the UK, average property prices achieved on completion are yet to match their pre-crisis score.”
Meanwhile, estate agent Knight Frank forecast that the cost of a home would rise by only 3.5 per cent in 2015, as the market pauses for breath.
In regional terms, the group expects house price gains in all areas of the country to be in the 3 per cent to 5 per cent range.
The South East is expected to see the strongest gains at 5 per cent, while growth will be slowest in the North East, North West, Yorkshire & the Humber and Wales at 3 per cent.
Despite the predicted slowdown in growth next year, the group still expects house prices to rise by a cumulative 18.2 per cent in the five years to the end of 2019, which would represent a 12 per cent gain in real terms.
The prediction comes amid growing evidence that the property market is beginning to cool as more homes come on to the market.
At the same time, survey evidence suggests demand is reducing as potential buyers are put off by the high house prices currently being demanded by sellers and the prospect of interest rate rises next year.
Mortgage lender Halifax last week said annual house price inflation may have peaked at 10 per cent, although it still reported a 0.6 per cent price gain for September.
Nationwide reported a 0.2 per cent fall in property values for the same month, with annual growth also slowing.
Property is significantly more affordable than at the start of the financial crisis in all areas of the country except London, research showed today.
Low interest rates have ensured it is easier for people to get on to the property ladder or trade up it in all regions outside of the capital, despite recent strong house price gains and stagnant wage growth, according to estate agent Hamptons International.
The group has created an affordability index, which not only looks at the house price to earnings ratio, but also factors in changes to the cost of living and mortgage rates.
The group said the amount of income families had left after paying for essential items, such as food and utilities, had fallen by 6 per cent or £60 a month since the start of the financial crisis in 2008.
This drop was largely due to the fact that post-tax income for a full-time working couple had increased by just 9 per cent in the past five years, but spending on essentials had soared by 28 per cent.
But despite recent house price rises, the average cost of a home is still 5 per cent below its pre-crisis peak, while low interest rates mean mortgage repayments account for a significantly lower proportion of people’s income than in 2008.
Fionnuala Earley, director of research at Hamptons International, said: “Our analysis shows that ability to buy across the country, but excluding London, has improved since the start of the recession when both house prices and interest rates began falling.
“London is the stand out exception. Here ability to buy is now worse than it was before the crash.”
Northern regions have seen the biggest improvement in the affordability of property since the financial crisis started.
Hamptons International estimates that affordability for first time buyers has increased by 305 per cent in Wales since 2008, while it is 212 per cent better in the West Midlands and 190 per cent better in Scotland.
But the group admits these figures do not take into account the large deposits people currently need in order to obtain a mortgage.
Other groups have not fared as well, with families with young children seeing the least benefit.
Although their ability to afford property has only deteriorated in London, the improvements seen in other regions have been far more muted, increasing by an average of just 27 per cent across Great Britain as a whole.
Looking ahead, as the economy improves, the group expects wages to rise in real terms, increasing people’s ability to buy a property, but it added that some of the improvement would be offset by higher interest rates.
Meanwhile, research carried out by the Daily Mail found that foreign buyers, particular Chinese and Russian investors, were turning their attention to properties outside of London as they looked to cash in on Britain’s strong housing market.
It said houses in South Wales and Weston-super-Mare, and flats in Manchester, Liverpool and Sheffield were being offered at foreign investment fairs and on estate agents’ websites in China and Russia.
The number of homes bought with cash had increased by over a fifth in the past year, according to estate agent Savills, and many of these purchasers are thought to be wealthy foreign buyers.
But there are fears that an influx of foreign investors will push up prices for first time buyers and families outside of the capital, which has recently seen strong growth in property values, largely due to demand from overseas buyers.
Britain is suffering a chronic lack of purpose built retirement housing, a new report reveals today.
Retirement housing makes up just 2.8 per cent of all new homes being built, and yet there is huge demand for such properties, according to estate agents Knight Frank.
A quarter of over 55s say they will consider relocating to a retirement village in the future, equating to 4.4m people.
The term ‘retirement homes’ referred in the report to properties specifically built with older people in mind and with some levels of care provided. However, it excludes care homes.
Grainne Gilmore, head of UK Residential Research at Knight Frank, said: “Housing can play a part in helping to mitigate the care burden. Ensuring older people have access to support and the level of care they need as they age can not only enhance living standards, but can cut care bills later in life as fewer acute services are needed.
“In many cases, living in suitable housing can ensure people stay ‘at home’ for longer, in a sociable and pleasant environment. The UK is far behind some other countries in providing retirement housing.”
Gilmore added: “There is no doubt that potential demand for these types of property is large, and is only set to grow. The housing wealth held by older generations is sizeable, and has been boosted by a near trebling in house prices over the last 20 years – downsizing to realise this wealth amid longer retirements is set to gain momentum.”
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RDF Television is currently making a documentary that is going to take a look at a cross-section of the £1m properties on the market.
The programme has been commissioned as part of Channel 4’s blue-chip Cutting Edge series and will likely transmit in a prime time slot early next year.
Jessica Reid, the programmer’s producer said: “We’re interested in featuring everything from one bedroom flats in London to castles in Scotland, city centre penthouses to far-flung farms and barn conversions to new build houses – and we’re also really keen to meet some of the people moving in and out of these homes.
“Across the film we hope to create a snapshot of what £1m buys you in various parts of the country and to find out more about how the property market works, as well as finding out what attracts people to the home that they’re hoping to purchase.
“Whether you’re looking to upsize or downsize; find your dream home or secure a brilliant investment property; start a new life in a different part of the country or move around the corner – we’re interested in hearing from you, so please do get in touch. You’ll find all of our contact details below.”
Please contact either Jess on 020 7013 4320, Joe on 020 7013 4373 or Marian on 020 7013 4324.
House prices hit a new record high in September, as property values passed their pre-crisis peak in a fourth region of the country, research revealed today.
The average cost of a home in the South West rose to £241,927 during the month to stand 0.6 per cent higher than before the housing market correction, according to LSL Property Services.
London, the South East and East Anglia are the only other regions of England and Wales in which house prices have risen above their previous highs.
But in other parts of the country prices continue to lag behind their pre-crisis levels.
Property values in the North have the most ground to make up, with values still 8.3 per cent or £13,400 below their March 2008 high.
In Wales the typical cost of a home is 6.8 per cent lower than before the market downturn, while prices in the North West and Yorkshire and the Humber are 5.8 per cent and 5.5 per cent lower respectively.
By contrast the typical home in London now costs £578,377, 47.3 per cent more that it did when prices previously peaked in 2008.
Across England and Wales as a whole the value of the average home reached a new record of £275,820 in September – £26,440 more than in the same month of 2013.
But there were further signs of a cooling in the property market, with prices rising by just 0.5 per cent during September, the lowest increase since November last year.
There was also a fall in the annual rate of growth, with this easing to 10.6 per cent, down from 10.7 per cent in July, the first decline recorded since May 2013.
The slowdown was most pronounced in London, where property values edged ahead by just 0.1 per cent.
David Newnes, director of Reeds Rains and Your Move estate agents, said: “September saw the lowest monthly increase in property prices in 2014 so far, as a new spell of market adjustment sets in for the autumn.
“But while price growth dulls, activity in the market is still vibrant, and total house sales completions are up 16 per cent year-on-year in September.”
Chartered surveyor e.serv also reported a pick up in market activity during September, with the number of mortgages approved for house purchase increasing for the first time in three months.
A total 65,469 mortgages were in the pipeline for people buying a property, 2 per cent more than in August, although the figure was 1.8 per cent lower than in September 2013.
Within the total, 11,600 loans were for people borrowing 85 per cent or more of their property’s value, the second highest level since June 2008.
It was also the tweentieth consecutive month during which high loan-to-value lending has increased on an annual basis.
Richard Sexton, director of e.surv, said: “Approvals declined over the summer, as demand dropped off over holiday season.
“The changes introduced in the Mortgage Market Review also took a few months to settle down.
“But looking ahead, the road looks steady. We are still a way off where we should be, but there are reasons to be optimistic.”