The average price has now reached £270,636 but the growth is being dominated by London and the South East, the LSL house price index shows.
UK wide the annual price growth is 9.9% but this drops to 4.6% when London and the South East are excluded from the calculation. The average price in London is not £560,386.
Month on month prices are up 0.6% and prices have stabilised across seven regions with the market being described as ‘steady’.
The index data also shows that there were 90,000 sales in July, up 10% from the previous month and 21% year on year and the report says the housing market has recovered from a slowdown caused by the introduction of new mortgage rules in April.
First time buyers and buy to let landlords are helping the flow of activity in the UK housing market, according to David Newnes, director of Reeds Rains and Your Move estate agents, owned by LSL Property Services.
‘As the common property choice of a new buyer or investor, flats have seen the largest increase in sales during the second quarter of this year, rising by 36% compared to the second quarter of 2013,’ he said.
‘As the market emerges from the chrysalis of regulatory change, sales have climbed 10% in the past month. But chequered supply across the country has created considerable regional variation in sales. London and the South East have seen the slowest growth in house sales between the second quarters of 2013 and 2014,’ he explained.
He added that in these areas, limited availability of property is impacting sales. Elsewhere, lower prices and the stimulus of Help to Buy are aiding activity. The biggest boost in sales during the second quarter of 2014 was in the North West and East Midlands, increasing by a 32% on the same period last year.
With the average price paid for a home in London reaching £560,386 in June, following a £10,850 monthly rise, in some locations the temporary waning of growth has halted. Indeed the report shows that 24 London boroughs have set new peak prices and in Kensington and Chelsea average house prices are on track to surpass the £2million mark.
‘However, a dampening of sales activity and more supply starting to come to the market will help control house price inflation in London,’ said Newnes.
He also pointed out that housing policy should not be led astray by what is happening in prime central London. ‘If London and the South East are removed from the equation, the annual change in average houses prices drops by 5.3% to 4.6%.
Average prices in Northamptonshire, Bournemouth, and Wiltshire rose in June as the housing recovery starts to spread. The tendrils of recovery may be branching out from the centre, but they haven’t yet unfurled to all corners of the country,’ said Newnes.
‘Outside of London, the South East and East Midlands, prices dropped and stabilised across all other seven regions in June and a more thoughtful and prudent housing market is emerging. Lending is stabilising to sustainable levels, and supply and demand is more balanced,’ he explained.
‘Further interventions or tighter rules could fracture the health of the recovery, particularly further afield where schemes like Help to Buy are a necessary tonic spurring new buyers onto the housing ladder,’ he added.
