London house prices increased by almost £500 a day in January, according to government figures that provide fresh evidence of a “two-speed” property market.
The latest data from the Office for National Statistics (ONS) reveals that while London and the south-east are powering ahead with double-digit annual growth rates, the property markets in Wales, Scotland and Northern Ireland appear to have stuttered to a halt.
Overall, the average price of a UK home had just under £4,000 added to its value during January, lifting the typical figure to £291,504. This is almost £40,000 higher than the figure of £251,935 recorded two years earlier, in January 2014.
The average London house price hit a record £551,000, said the ONS. This was £15,000 up on December’s figure of £536,000 and translates into an increase of £484 a day.
Annual house price growth in the south-east, London and the east of England is running at 11.7%, 10.8% and 9.8% respectively. By contrast, prices fell in Wales over the same period - by 0.3% - and notched up rises of just 0.1% in Scotland, 0.8% in Northern Ireland and 0.9% in north-east England. The strong price growth in the south-east may reflect the fact that growing numbers of homeowners in the capital are cashing in on London’s turbo-charged performance and buying properties in commuter belt towns and cities.
Jonathan Hopper, the managing director of Garrington Property Finders, said that “seldom has the gulf between Britain’s two-speed property market been so stark”. However, he added that it was likely that the numbers were given a boost by a last-minute “stamp duty stampede”, as buy-to-let investors rushed to complete purchases before April’s 3% hike in stamp duty.
Hopper added: “That temporary spike in buy-to-let demand is likely to disproportionately impact areas around the capital, where the number of would-be renters is high. But this still can’t explain away such a huge regional divergence.”
Mark Posniak, the managing director at Dragonfly Property Finance, said: “This latest annual house price data once again throws into sharp relief the contrast between the housing markets of England, Wales, Scotland and Northern Ireland. They may be geographical neigbours but they could be thousands of miles apart in terms of house prices.”
Howard Archer, a UK economist at consultancy IHS Global Insight, said the EU referendum on 23 June was potentially a major risk to housing market activity and prices. He said: “A vote for Brexit would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market.”