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Is the housing boom over? UK property prices rise by smallest increase in 15 months


08-03-2014

 

House prices have increased by 0.1 per cent, the lowest increase in 15 months

HOUSE prices rose by just 0.1 per cent this month prompting speculation that the upward spiral of property values may be coming to an end.

By: Rebecca Perring

House prices have increased by 0.1 per cent, the lowest increase in 15 months House prices have increased by 0.1 per cent, the lowest increase in 15 months [SWNS/GETTY]


Although still rising, the percentage is the smallest increase in the past 15 months with the average home now costing £188,949, according to figures released by Nationwide.

Prices have risen by 10.6 per cent since this time last year, adding an average of £20,000 to the value of a UK home.

But stricter rules on mortgage lending - which came into force in April - helped cool the market in July as prospective homeowners now have to undergo a thorough vetting to ensure they can afford the repayments.

Nationwide said the small rise in house prices was not unsurprising and a lack of supply could mean the slowdown is temporary.

Nationwide Chief economist Robert Gardner said: "The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months and there has also been some softening in forward looking indicators, such as new buyer enquiries."

The Nationwide figures complement those released earlier in the week by the Land Registry, who found that the typical selling price of a property across England and Wales had remained exactly the same, indicating a fall in real terms, due to inflation.

However Howard Archer, chief UK and European economist at IHS Global Insight said he expects house prices to increase by around 3 per cent over the second half of 2014.

He said: "We take the view that house prices will keep on clearly rising over the coming months but there will be some moderation from the recent peak levels.

"More stretched house prices-to-earnings ratios, the prospect that interest rates will soon start to rise, albeit gradually, and tighter checking of prospective mortgage borrowers by lenders will likely have some dampening impact on buyer interest.

"Even so, with the economy seen holding up pretty well going forward, employment high and rising, consumer confidence elevated and earnings growth likely to improve, and with housing supply remaining tight in many areas, house price growth will probably slow gradually."

A lack of new homes, especially in London and the South East has helped put an upward pressure on house prices over the last few years. A typical home in London now costs twice the UK average.

Jeremy Duncombe, director of the Legal & General Mortgage Club, said: “The overall trend remains upward across the UK with the average house price still £20,000 more than this time last year.

“While the market is starting to cool off, the picture is still very regional and so all efforts should be towards ensuring that the recovery is sustainable and consistent.

"At the moment, demand still outstrips supply, particularly in areas such as London and the South East, and this issue urgently needs to be addressed with the building of more homes.”

 

 

House prices are not falling off a cliff, these latest figures show they are currently having a welcomed pit-stop, which is necessary for long-term, sustained growth

Paul Smith, CEO of haart estate agent


A shortage of decent family homes has seen the fastest selling times on record in nine regions across Britain. The typical home now spends just 88 days on the market – 16 days faster than this time last year. Properties in London sell in an average of 43 days. 

Higher house prices have helped push stamp duty revenues close to an all-time high, Nationwide said.

According to the report by the group, the widening gap in house prices between London and the rest of the UK is causing a huge imbalance in the amount of stamp-duty buyers are paying.

Mr Gardner said: "Stamp duty revenues are near the all-time highs recorded in 2007 and 2008, reaching over £10 billion in the 12 months to June 2014."

"We estimate that London contributed around 42 per cent of the total stamp duty paid on residential properties in 2013 and 2014, even though the capital only accounted for around 15 per cent of house purchase transactions.

"This largely reflects the substantial and growing gap between house prices in the capital and the rest of the UK, where the typical London home now costs more than twice the national average.

Nationwide's analysis of Land Registry data, which covers England and Wales, found that around £70 million worth of stamp duty was generated in Wales in 2013/14, compared with £178 million in the North West, £434 million in the South West and £69 million in the North.

However the slowdown did not stop one buyer from splashing out a whopping £500,000 on three garages.

The space in south-west London went for more than double the average house price and the garages did not even have planning permission.


The row of Wandsworth Common garages started at an offering price of around £130,000, but a growing interest meant that the first bid came in at £175,000 when all three freehold garages went under the hammer at the Barnard Marcus Auction in London on Tuesday.

 A shrewd buy the garages could potentially be turned in to houses as in the catalogue issued for the sale it read: "may be considered suitable for redevelopment or reuse".

Henry Pryor, a property buying agent added: "I am not surprised to hear the price. The conversion of garages into homes is very much in vogue at the moment.

"The Mayor's office have identified hundred of sites which could be used to solve the capital's housing crisis.

"I expect these garages will turn out to be a shrewd place for the buyer to park their money."

The three garages in Wandsworth is the latest huge price paid for a lock-up in the capital.

In May, an investor bought a row of six garages in Parsons Green which were offered with no planning permission for £700,000 - ten times the estimate.

While a former coach house in Camberwell, which was used to park the Mayor of Southwark's car, sold for £550,000 in April.

www.express.co.uk/

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