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London houses now average £500,000, as UK-wide prices rise at fastest rate in 14 years

UK house prices surged at their fastest rate in almost 14 years over the past year, while London houses remained the priciest of any region despite the lowest annual growth.

Stoked by the extended stamp duty holiday, the capital’s house prices at an average of £500,000 were the most expensive of any region in the UK in the year to March – but saw annual growth of just 3.7 per cent.

The latest figures from the Office for National Statistics (ONS) showed that prices grew at an annual rate of 10.2 per cent in March, the highest since August 2007, around the same time as the last recession.

However, the increase was up from the 9.2 per cent annual rise observed in February.

Meanwhile, the average price for a house in the UK now sits at around £256,000 – £24,000 higher than in the same month last year.

The stamp duty holiday had prompted sellers to demand higher asking prices, ONS suggested, as buyers’ overall costs had been slimmed down.

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“Whilst this will provide comfort to those lucky enough to own their own home, for those aspiring to buy their first home, the first rung of the property ladder has just got a little further out of reach,” CEO of online property platform Twindig, Anthony Codling, said.

‘Reassessing needs‘

Multiple national lockdowns have spurred many homeowners and potential buyers to revaluate their needs when it comes to house buying, chief economic advisor to the EY ITEM Club, Howard Archer noted.

“Nationwide has said that behavioural shifts may also be boosting activity, as people reassess their housing needs and preferences as a result of lockdown.

“It appears that an increasing number of people want a garden and also space to work at home. This is leading to some polarisation in demand for residential properties.”

Nick Leeming agreed, adding that office space for hybrid working and access to nature has been crucial to homebuyers.

“Today’s house price data provides a clear indication of how much the pandemic has shifted the property market over the past 12 months.

“Our branches in quintessentially English country-side towns such Chichester, Taunton and Chipping Campden continue to see the highest number of new applications, alongside London’s prime commuter-belt towns, including Sevenoaks, Dorking and Cranbrook.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

“In London, buyers are paying £20,000 more than they were before the pandemic.”

As we, hopefully, leave lockdowns behind towards the end of the year and the market waves goodbye to the stamp duty holiday, house prices may level out Archer added.

“The EY ITEM Club suspects house prices will lose momentum again later on this year and could well be flat year-on-year by early 2022 with some quarters of falling prices.

“This will be down to the stamp duty benefit ending, unemployment rising and a waning of pent-up demand.”

Leeming continued: “While the extent of current demand may continue to fuel the market for some time yet, it can’t be sustainable forever.

“I would suggest that anyone considering selling their home to do so now while the market conditions are so favourable and there is still room for further price growth.”

Mortgage guarantee

The government’s mortgage guarantee programme also played a part in the inflated prices, aimed at new-buyers, Nick Barnes said.

“There was also an element of anticipation for the imminent introduction of the government’s new mortgage guarantee scheme. Non-resident buyers had the additional incentive to beat the deadline for the introduction of the 2 per cent stamp duty surcharge from the beginning of April.”

The programme may have sparked more market interest in recent weeks, following reduced mortgage approvals this year, as Archer highlighted: “The Bank of England reported that mortgage approvals for house purchases fell back to an eight-month low of 82,735 in March from 87,385 in February.”

By Millie Turner

Source: City AM

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London house prices to boom over the next five years

London house prices are set to boom over the next five years, estate agent Savills said as it upped its UK property market forecasts for 2021.

House prices in London’s mainstream market are expected to rise 12.6 per cent in the five years ended 2025, the real estate firm said.

Meanwhile prime central London house prices are rated a “buy” as they are down 21 per cent from peak, and are expected to “rebound strongly”.

Prime central London prices will rise three per cent this year, seven per cent next year and total 21.6 per cent by 2025.

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Savills upgraded its UK house price forecasts for this year to growth of four per cent, compared to its previous expectation that property values would remain flat in 2021.

Over the five years to the end of 2025, it anticipates UK-wide house price growth with total 21.1 per cent.

Housing transactions are expected to reach highs of 1.4m this year before falling back to pre-Covid levels in 2023.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

However, markets furthest from the capital are expected to see the strongest growth, with the north west and Yorkshire and The Humber leading the way.

“2021 is going to be a complex and uneven year, with competing forces impacting the housing market at different points,” Lucian Cook, Savills head of residential research, said.

“But the outlook has improved since the beginning of the year given the speed of the vaccination programme, the expected relaxation of social distancing measures and government support for both jobs and the housing market.

By Jessica Clark

Source: City AM

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Exclusive: South London boroughs lead house price charge

The south London boroughs of Merton, Croydon and Kingston saw the fastest house price growth in the year to August as the capital’s property market remained surprisingly buoyant, according to exclusive analysis by property website Zoopla for City A.M.

Price growth was much slower up in Hillingdon, Barnet and Brent, however, reflecting big differences within the London housing market during the coronavirus pandemic.

Property prices jumped 3.2 per cent in Merton in the year to August, Zoopla’s new analysis of its latest house price index showed.

Croydon was not far behind with growth of 3.1 per cent. Prices climbed three per cent in Kingston upon Thames and 2.8 per cent in Sutton.

It is the latest evidence that buyers are looking to move to leafier suburbs during coronavirus, which has spelled the end of the office commute for many.

“There is definitely a cohort of buyers who are looking for something different, maybe more space and are going further out,” Grainne Gilmore, head of research at Zoopla, told City A.M.

London house prices: The top five risers in August

BoroughAverage priceQuarterly changeAnnual change
Merton£507,8000.4%3.2%
Croydon£376,7000.8%3.1%
Kingston£517,0001%3%
Sutton£395,6000.4%2.8%
Newham£375,8000.7%2.8%
Source: Zoopla

Yet she highlighted that some areas closer to London’s centre had also seen a sharp rise in prices.

House prices in Newham rose 2.8 per cent in the year to August for example, and they rose 2.7 per cent in Hackney.

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Tower Hamlets and Lewisham both saw growth of 2.6 per cent.

“A lot of demand is still remaining within the city,” Gilmore said. “People are maybe looking at different types of properties within the city, and that’s underpinned by the pricing we’re seeing in some of these areas.”

London house prices to face headwinds

The overall UK housing market has experienced a surprising surge during the coronavirus pandemic. That is despite the country entering an historic recession.

It has been boosted by the release of demand that was built up when the property market was shut down in the spring. Chancellor Rishi Sunak’s stamp duty holiday – which has raised the payment threshold to £500,000 until March – has also bumped up activity.

Zoopla’s August house price index showed that prices grew 2.6 per cent year on year, taking the average to £218,000.

In London, house prices grew 2.1 per cent in August. The average house in the capital cost £476,000.

However, experts caution that the housing market will face strong headwinds in the winter and next spring. Rising unemployment as government support is wound down and new coronavirus restrictions are two obvious problems.

London house prices: The top five fallers in August

BoroughAverage priceQuarterly changeAnnual change
City of London£788,100-0.9%-0.7%
Hillingdon£413,3000%0.4%
Barnet£539,2000.2%0.5%
Brent£486,8000.2%0.7%
Ealing£477,8000%0.9%
Source: Zoopla

Zoopla’s London analysis showed that the recent rise in house prices is highly localised.

Prices in the City of London fell 0.7 per cent year on year, for example, although Zoopla cautions that the sample size is not big enough to draw reliable conclusions.

Prices in Hillingdon grew just 0.4 per cent in the year to August, while Barnet saw a 0.5 per cent rise. Brent house prices have climbed 0.7 per cent.

Kensington and Chelsea remained by far the most expensive borough. The average house cost £1.17m in August. Westminster was second at £955,000, while the City was third at £788,000.

By Harry Robertson

Source: City AM

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Merton leads London house prices higher as buyers seek space

House prices in the south-western boroughs of Merton and Sutton rose at the fastest pace in London in the year to July as buyers looked for more space during the coronavirus pandemic, according to exclusive analysis by property website Zoopla for City A.M.

Prices barely budged in the borough of Hillingdon on the western edge of the capital and in Enfield in north London, however, reflecting the uneven effect of Covid-19 on the city’s property market.

Zoopla’s new analysis of its latest house price index showed that prices jumped 3.2 per cent in Merton the year to July and 3.1 per cent in Sutton. That was well above the UK average of 2.5 per cent.

In joint third place were Newham in east London, Haringey in north east, and Wandsworth in south west, where prices climbed 2.7 per cent.

Grainne Gilmore, head of research at Zoopla, told City A.M.: “We have seen rising demand for three-bed homes and larger houses in London. And the availability of this type of stock, across a wider range of price bands, is reflected in these locations.”

Stamp duty holiday boosts London house prices

UK house prices have soared to record highs in the wake of the coronavirus lockdowns, even as the country’s economy suffers its worst year in memory.

Pent-up demand – which accumulated while the property market was frozen in April and May – and the government’s stamp duty holiday have massively boosted the market.

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Zoopla said the stamp duty holiday, which raised the payment threshold to £500,000 until March, had lifted London sales by 27 per cent. Yet its analysis showed that the effect on the capital’s housing market has been uneven.

Hillingdon and Enfield were the least desirable for new buyers over the last year. Prices rose just 0.3 per cent and 0.4 per cent respectively.

Gilmore said: “While we are seeing demand outstrip supply in many areas, putting upward pressure on prices, this is happening to different extents in different localities.”

Harrow saw the third smallest rise with 0.9 per cent growth. Ealing was next with one per cent growth and Bromley had the fifth-smallest increase, of 1.1 per cent.

“We are also seeing the effects of a ‘one-off’ shift after lockdown, with demand from households who have reassessed how and where they want to live,” Gilmore added.

Analysts and estate agents have reported that buyers are looking for gardens and properties near parks, as well as more space.

Kensington and Chelsea the priciest borough

London house prices on average grew by 2.4 per cent in the year to July. It outpaced other areas in the south of England such as the south east, which saw 1.2 per cent growth.

However, regions in the north of England achieved the strongest growth. Yorkshire and the Humber and the north west both saw prices increase 3.2 per cent.

The price discrepancy between London’s different areas remained huge in July, Zoopla’s data showed.

In Kensington and Chelsea, where prices grew two per cent in the year to July, the average house cost £1,170,700.

Westminster was the second-most expensive, with the average property worth £955,000. House prices grew 1.8 per cent over the year in the borough. The City of London, where prices climbed 2.2 per cent, was third with an average price of £786,400.

Barking and Dagenham was the cheapest borough, with the average house costing £293,000. Bexley was second cheapest, at £344,700, while Havering came in third, at £366,800.

What happened to house prices in your London borough?

London boroughCurrent priceQuarterly changeAnnual change to July
Merton £507,4890.8%3.2%
Sutton £394,2400.3%3.1%
Newham £374,6990.7%2.7%
Haringey £512,1140.3%2.7%
Wandsworth £626,2500.7%2.7%
Lambeth £525,4740.7%2.6%
Waltham Forest £445,1100.8%2.6%
UK£217,5280.6%2.6%
Croydon £375,7490.9%2.6%
Havering £366,7960.8%2.5%
Barking and Dagenham £293,0380.8%2.5%
Southwark £487,8770.5%2.5%
Greenwich £376,6450.3%2.4%
Lewisham £413,8030.3%2.4%
Islington £602,6250.4%2.4%
Kingston upon Thames £515,1660.9%2.3%
Hackney £528,1780.8%2.2%
City of London£786,376-0.1%2.2%
Hammersmith and Fulham £715,2140.3%2.1%
Kensington and Chelsea £1,170,6620.3%2.0%
Tower Hamlets £460,5190.8%2.0%
Richmond upon Thames £698,0550.3%1.8%
Hounslow £424,0550.3%1.8%
Westminster £954,9910.1%1.8%
Redbridge £425,180-0.3%1.7%
Bexley £344,6880.7%1.7%
Brent £485,7500.2%1.4%
Camden £722,3230.1%1.4%
Barnet £537,8900.1%1.3%
Bromley £460,2430.5%1.1%
Ealing £477,3890.1%1.0%
Harrow £471,8930.5%0.9%
Enfield £403,0360.8%0.4%
Hillingdon £412,708-0.2%0.3%

Source: Exclusive Zoopla house price index analysis for City A.M.

By Harry Robertson

Source: City AM