Rise in house prices gathers pace - and why London is 'another country'
02-07-2016
House prices were supposed to ease this year with affordability reaching a tipping point and buy-to-let investment drying up, but there is little sign of that happening yet.
Following several surveys revealing an increase in price growth in December and January, Halifax has today published its latest index showing valuations across the UK rose 9.7 per cent on an annual basis last month. This means house prices are accelerating at their fastest level since July 2014, when prices were rising at more than ten per cent, the Daily Telegraph notes.
One of the reasons being widely cited for the surge in demand thought to lie behind the pick-up in price rises is buy-to-let investors rushing to purchase ahead of major tax changes. From April, anyone buying a second home will have to pay a stamp duty surcharge of three per cent, upping the up-front tax bill on a £250,000 home from £2,500 to £10,000.
Things could turn around after the new measure is introduced, although opinion is mixed on how severe a slowdown in buying by private landlords, who are also being hit with a reduction in mortgage interest tax relief, might be – or even if it will slow at all.
Many analysts had estimated that softening demand coupled with more housebuilding could see price rises over this year settle at between two and four per cent.
At the moment, though, housing continues to surge and affordability is still being squeezed. Nowhere is this more evident than London, where the housing market is becoming so detached from the wider UK that it has been called "another country".
Research by estate agency Stirling Ackroyd, based in part on Land Registry figures, found more than half of the 279 postcode districts in Greater London had an average price of at least £500,000, says The Guardian. In contrast, just 0.6 per cent of postcodes outside the capital have an average price of more than £500,000.
"London is increasingly another country," said Andrew Bridges, the managing director of Stirling Ackroyd. "Within these borders, more and more territory is being claimed by home values only dreamed of by sellers in the past.
"Gone are the days of the traditional prejudices about certain postcodes. London is more diverse than ever, but the boundaries are shifting and blurring."