Average property prices in England and Wales are continuing to fall on an annual basis while in London value are rising, a new analysis shows, but the outlook for sales sluggish due to Brexit and interest rates.
Year on year prices in England and Wales have increased by 2.5% to an average of £293,897 and sales are also down, falling by 2% in the 12 months to July, according to the latest report from London Central Portfolio (LCP).
However, prices are up 3.9% on a quarterly basis and in the new build market prices remain close to a record high of £343,174, some 21% more than existing homes.
But in Greater London average prices in July reached £636,560, an annual rise of 2.2%, although sales are also down, falling by 6.5%. The report points out that these falls have been seen across Greater London, with new build transactions dropping 12.1% over the year.
But new build prices also reached another record high of £784,892, representing a 32.3% premium over existing stock.
In the prime central London market price growth is even stronger at an average of £1,965,774, some 12.5% higher than a year ago and a 14% increase from the previous quarter.
But again, sales are down, falling 8.3%, and these falls have been seen across the prime central London market, with new build transactions falling 25.3% across the year. New build prices, however, were at a record high of £3,413,324, which is in excess of 90% premium over existing stock.
According to Naomi Heaton, chief executive officer of LCP, overall the residential market is sluggish and she believe that it is very difficult to see what can be done to change the present trends prior to March 2019 when Britain leaves the European Union.
There is also the potential impact of interest rate rises. ‘Greater London is primarily a domestic market, therefore the interest rate rise could have a greater impact on the level of transactions, as home ownership becomes even more expensive in a price sensitive market,’ she said.
‘Despite the Government’s commitments to affordable housing for Londoners, average prices are continuing to rise. This, coupled with the increase in interest rates, means those looking to get on the housing ladder are likely to be pushed even further out,’ she explained.
‘There are very few causes for optimism in the domestic property market, where real terms, inflation-adjusted, house prices are no higher than they were in 2007. Affordability remains heavily constrained in a post Mortgage Market Review world, where wage growth struggles to out-pace inflation,’ she also pointed out.
‘Artificial stimulation of the market through Help to Buy and first time buyer incentives has supported the market but there is a general reticence amongst up and down sizers to commit at this point. The continued lack of a defined exit plan from the European Union, combined with economic uncertainty and a number of punitive tax changes targeting the buy to let sector, have caused the market to stagnate,’ she added.
