House prices in London and the South East: still on the rise?
Average house prices at £200,000, an all time high
The Halifax’s latest index shows that the average UK house price has hit an all-time high at £200,280, with annual house price inflation (HPI) now running at 9.6% to June 2015. Halifax said the rise was being driven by tight supply, with the number of homes for sale now at a record low.
Halifax’s housing economist Martin Ellis said there were “now signs of a recent modest pick-up in demand. Economic growth, higher employment, increasing real earnings growth and very low mortgage rates are all supporting housing demand.”
The most recent Nationwide House Price Index was slightly less positive, with an average house price of £195,055 and annual HPI at 3.3% to June, although London and the South East regions both saw between 6% and 7% HPI and are showing no signs of ‘cooling down’ at the moment. Consumers are clearly more confident about buying property than they were a couple of years ago, reassured in part by Government schemes to boost lending such as Help to Buy.
London’s ripple effect out into the South-East
Constant talk of a house price ‘bubble’ in London is understandable given how fast property values have risen in the last decade, compared with other parts of the UK. But London is not typical of the UK. It is a major global city in a country with a safe political system, a strong, stable currency and a relatively low tax environment. Much of the property inflation in London is not being driven by increased mortgage lending. Foreign investors regard London’s prime property market as a safe haven for their capital and many of the largest transactions are cash sales.
So if prices in London keep rising (and they look set to do so for many years to come) then people who work – and would like to live – in London are being displaced from the centre of the city and paying more for their homes in the Greater London area. That in turn is pushing those who lived there further out into the South East of England.
Not a bubble, more a permanent imbalance between supply and demand
With property in and around London so scarce, unless the government starts building thousands of houses in London and the South East right now (and continues to do so for many years to come) the law of supply and demand means that prices will keep rising.
What should you do?
Contact Marchwood IFA for a chat about financing your next property purchase. Unlike individual high street banks and building societies, we can advise you on the right mortgage for you from the whole of the market. Finding the right mortgage product is one thing but getting a mortgage offer is altogether different. And this is where we really add value. Our sole objective is to get you what you want in the most painless way possible. When dealing with the banks this is not always straightforward, particularly at the moment as the effects of the Mortgage Market Review continue to be felt. We collect everything required from you and liaise on your behalf with the lender until the mortgage offer is produced and you can move into your new home. Whether you are buying a new home or an investment property or wish to refinance an existing mortgage, we have the skills, tools and experience to help.
Your property may be repossessed if you do not keep up repayments on your mortgage.