Overall nationwide price growth was 9.9% and the data from the Office of National Statistics confirms that London has been leading the growth at 18.7% with a rise of 8.9% in the South East and 8.5% in the East of England.
House price annual inflation was 10.4% in England, 3.3% in Wales, 4.8% in Scotland and 2.6% in Northern Ireland. Excluding London and the South East, UK house prices increased by 6.3% in the 12 months to April 2014 and on a seasonally adjusted basis, average house prices increased by 2% between March and April 2014.
In April 2014, prices paid by first time buyers were 10.7% higher on average than in April 2013 while for existing owners prices increased by 9.5% for the same period.
More recent data, notably from the Nationwide Building Society and Rightmove suggest that the growth in London is now slowing. Knight Frank has also said that it expects price growth in some London markets to slow and even stall in coming months.
Peter Rollings, chief executive officer of Marsh & Parsons, believes that a turning point has been reached. After a very lively start to the year, where an acute lack of supply and subsequent competition for homes pushed prices higher, we’re now sailing into steadier waters,’ he said.
‘Stricter controls for mortgage affordability and the renewed housing stock is moderating the market and property price growth has slowed. As a result, in prime London the ratio of registered buyers per available property has fallen from 24 in January 2014 to 16 in June, so as the market returns to more normal trading conditions, buyers can make the most of the extra breathing space,’ he explained.
‘London has long been akin to its own city state, and is wholly unrepresentative of the broader nationwide picture. If the government or the Bank of England were to slam their foot on the brake too heavily, they risk setting back the emergent housing market recovery outside of the capital. In his Mansion House speech, the Chancellor indicated that he will not tinker with the Help to Buy scheme, which is buoying the lower end of the market and helping redress the imbalance across the country,’ he added.
Oliver Atkinson, director at online estate agent urban sales and lettings, said it is too soon to say that the market is cooling. ‘There is no let down in demand as first time buyers and second steppers continue to make strides in the property market across the country. Thanks to a gradual improvement in consumer confidence, discerning first time buyers are saving harder and borrowing more to pay a higher price for their property,’ he pointed out.
He also pointed out that the long term effects of the recently introduced MMR lending rules will now be the real test for the property market. ‘The government needs to exercise patience before making any further interventions as this could rock the boat and reverse the gains made by the housing market,’ he added.
According to Karen Bennett, sales and marketing director for commercial mortgages at Shawbrook Bank, people should not get too preoccupied with prices in London and the South East. ‘It’s important not to forget the state of housing in the rest of the country. House prices in other regions are increasing at a slower rate but are rising and are a promising environment for experienced property investors who are looking to engage with a buoyant property market. It will be interesting to see how later in the year overall demand for housing and house prices are affected by tightening residential controls due to the MMR,’ she said.
Stuart Law, chief executive officer of Assetz, said the figures do not reflect what has happened since April. ‘The hot topic now is the easing back of property price growth in the London market as demand for homes dips due to a mixture of factors such as the MMR and chatter of interest rates rising sooner than expected,’ he explained.
‘What this data does show is the strength of regional property markets, with annual growth across all areas of the country, even the North, which until recently was struggling to gain momentum. Help to Buy has spurred on demand mostly outside of London and the South East and whilst London is still viewed as the safest place in the world for property investors for capital growth, those searching for better future returns are looking away from London, to where employment is strong and yields are growing,’ he added.
