London house prices average at £500,000, hitting a 14-year high
Multiple national lockdowns have spurred many homeowners and potential buyers to revaluate their needs when it comes to house buying.
UK house prices surged at their fastest rate in almost 14 years over the past year, while London’s homes 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.
“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.
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.”
Chairman of residential property firm Jackson-Stops, 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.
“In London, buyers are paying £20,000 more than they were before the pandemic. Camden continues to see the highest number of new applications, alongside London’s prime commuter-belt towns, including Sevenoaks, Dorking and Cranbrook.”
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.”
Read more: March was HSBC’s strongest mortgage completion month in more than 40 years
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.”
The government’s mortgage guarantee programme also played a part in the inflated prices, aimed at new-buyers, head of research at Chestertons, 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.”