“No risk of a price bubble outside London”
The latest property figures from Rightmove show massive increases in the numbers of sellers in London and huge price hikes (although Neal Hudson from Savills pointed out this morning on Twitter that it is “Worth remembering that Rightmove house prices are not seasonally or mix adjusted so more volatile than other indices”).
So, the national average asking prices are up 2.8% (£6,923). Meanwhile, new seller numbers in London are up 15% where asking prices have also risen over 10% month on month – this means the average asking price has beaten July’s high of £515,379 and now stands at £544,231, an increase which Rightmove argue is “unsustainable”.
Or to put it another way, prices in outer London are more than double those in the rest of England and Wales.
“Although not sustainable in the longer term, some agents currently report there is a buying frenzy in parts of prime inner London,” said Miles Shipside, Rightmove director and housing market analyst, “with available stock so low that their shelves are now bare. Unsurprisingly, many of this month’s best performers are boroughs in inner London. There is a long-standing imbalance between supply and demand in London, and as a result both the average price and the entry price are high. Hence, phase two of the Government’s Help to Buy scheme is likely to bypass many buyers in the capital and mainly benefit those in other regions.
Away from London, it’s a rather different picture. The West Midlands and Wales showed monthly falls in house prices, five regions’ prices were still negative year-on-year (North, North West, Wales, West Midlands, South West), and seven regions recorded annual price increases which lagged behind inflation. Which prompts Rightmove to go so far as to say that there is “no risk of a price bubble outside London”
“With the London market failing to provide the range of affordable properties its growing population needs, the South East is experiencing upwards price pressure as demand spills over,” added Shipside. “With an average price of just over £300,000, a commuter-belt property is in the cross hairs of Help to Buy assisted purchasers unable to afford the London market. Help to Buy will give some people a leg up onto the South East’s property ladder, but it also needs to spur more first-time movers to trade up to increase property supply and temper future price rises”.
A report from Home.co.uk last week described the London property bubble as expanding at an “alarming” rate, with Doug Shephard, director at Home.co.uk saying that a growing concern is that regional house price bubbles are beginning to emerge where demand for housing continues to far outstrip supply. “A lack of attractive non-property investment opportunities coupled with the widely reported surge in home prices is making potential vendors hold back,” he said. “As a consequence, the flow of new property stock across England and Wales is down 18% on this time last year.”
Pictured is a 3 bedroom flat for sale in Furness Road, London NW10, on with Bairstow Eves for £550,000
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