Prices are up 0.3% compared to December 2014, taking the average house price to £277,857, according to the latest LSL house price index.
On an annual basis average prices are up 7.5% but when London and the South East is excluding from the figures the year on year price growth for the rest of the country is 4.5%.
Property prices in the North are experiencing the biggest boost at the start of the year and the strongest sales growth is in the North and Yorkshire which seems to be due to a surge in demand from first time buyers.
Adrian Gill, director of Reeds Rains and Your Move estate agents, pointed out that January’s 7.5% annual growth is the smallest yearly improvement for 10 months and represents a deceleration from 8.9% in December as house price inflation continues to flag.
‘After some recent price falls, average property values haven’t taken any steps forward from where they stood in November and what we’re seeing is a far cry from the marathon of monthly increases that set off this time last year,’ he said.
‘In a reversal of fortune, London is leading this slowdown. The capital has long been the propeller driving forward growth, but after cruising ahead at full speed in 2014, the London property market has run aground momentarily,’ he added.
Indeed, average London house prices experienced the biggest drop during December at 1.1%, but Gill said this is just a symptom of the unsustainable rate of growth that the market stretched to last year, as the capital now takes a pause.
He also pointed out that while a prospective mansion tax and the higher rate of Stamp Duty on million pound homes may be a blot on the buying landscape at the top end, everyday buyers are simply able to take their time to deliberate and get their finances in order now that market conditions have rationalised again.
‘With a greater supply of available homes on the market, we are striking a better balance between sellers and buyers, and at the bottom rungs of the ladder in particular, demand remains vibrant. The lowest priced London borough, Barking and Dagenham, has seen the biggest boost in home sales during the fourth quarter of 2014, up 33% on the same period a year previously, helping to drive annual house price growth of 14.4%,’ he explained.
‘The London story acts as a miniature model of what’s happening in the rest of the UK housing market. The market is temporarily treading water at the higher end, but fast moving in areas where price growth has been more modest, and where cheaper properties are within reach of new buyers and borrowers who can access Help to Buy,’ said Gill.
‘For instance, when you London and the South East from the equation the slowdown in annual price growth is much shallower, as growth across other parts of the country continue to sail along steadily. The North saw the biggest uplift in prices in December, while property values made similarly positive progress in Yorkshire and the Humber, and Wales. In these areas demand is thriving as buyers enjoy the perfect storm of record low mortgage rates, more affordable house prices and lower stamp duty costs, and the best properties are being snapped up quickly. Coupling those conditions with steady price growth buyers are seeing many reasons to act now,’ he added.
He said that while sales volumes across the South are slightly more sluggish, the North is the current powerhouse of activity, with completed home sales up 7% year on year during the final quarter of 2014, followed by 4.1% annual increase in Yorkshire and the Humber.
‘This growth is built on sustained first time buyer appetite for homes, and as this slice of the market continues to grow, flats and terraces are changing hands at the fastest pace and are the property type most common among new buyers,’ said Gill.
