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House Prices Fuel London Bubble Talk

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There is still no sign of a slowdown in the house market recovery, wth many observers beginning to talk about the dangers of a  new bubble, especially in London.


According to Rightmove, the average asking price rose by 2.8% in October, with London prices surging 10.2% and new seller numbers by 15%. Miles Shipside, Rightmove director and housing market analysis, said “although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare”.

However, Rightmove said that a bubble seems a long way off in the majority of regions outside London, with two having recorded monthly falls (West Midlands and Wales), five still negative year-on-year (North, North West, Wales, West Midlands, South West), and seven in ten regions recording annual price increases with lag behind inflation (all bar London, South East and East Midlands are below the 3.2% annual rate of RPI)

Figures from the Land Registry shouw and annula price increase of 3.4% in September across the UK, with Lodnon prices leading the way, up 9.3%. Transaction numbers also picked up. The most up-to-date figures available show that during July 2013, the number of completed house sales in England and Wales also increased significantly, by 17% to 69, 140 compared with 59, 141 in July 2012. The number of properties sold in England and Wales for over £1m in July 2013 increased by 34% to 1,143 from 852 in July 2012.

Housing transactions appear to be moving in an upward trend. HM Revenue and Customs reported house sales during the July to September quater were 21% higher than in the same three months last year. The Bank of England recorded the number of mortgage approvals for house pruchases – a leading indicator of completed house sales – in the three months to September was 11% higher than in the previous quarter. This postive sentiment towards selling was also noted by Martin Ellis, Housing Economist at the Halifax, who believes there will be an increase availability of properties on the market over the coming months. The Halifax’s house price index showed house rices increased by 0.7% in October and were 1.6% higher than in previous quater (May-July).

Nationwide said that UK house prices increased by 1% in October and were 5.8% higher than in October 2012. Chief Economist Robert Gardner said “the ability and willingness of potential buyers to transact has been steadily increasing . . . while house prices growth has picked up, at a national level price growth has picked up, at a national level prices remain around 7% below their 2007 peak. Moreover, typical mortgage servicing costs remain modest by historic standards thanks to the ultra-low level of interest rates”

Official figures from the Office for National Statistics showed that in the 12 months to August 2013 UK house prices increased by 3.8%, up from a 3.3% increase in the 12 months to July 2013. The year-on-year increase reflected growth of 4.1% in England, 1.1% in Northern Ireland and 1.0% in Wales, offset by a fall of 0.7% in Scotland. Annual house price increase in England were driven by London (8.7%), the East Midlands (3.8%) and the West Midlands (3.5%). Excluding London and the South East, UK house prices increased by 2.1% in the 12 months to August 2013.


Article from R & S Magazine December 2013 p 23

 


 

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