House prices across the country continue to surge. Data published by the Land Registry this morning shows the average UK property price was £190,275 in February, a 6.1 per cent climb on the same month last year.
London leads
London house price growth continued to outpace the rest of England and Wales. The average price in London was £530,368 in February, a rise of 13.5 per cent on the same month last year. It is the fastest annual growth rate since early last year, when London house prices were cooling after a period of rapid annual price growth that peaked in excess of 20 per cent.
“As the capital’s population keeps on growing, the London housing market is getting ever warmer and more crowded. This is underpinning solid house price growth for sellers. But for buyers and renters it makes entry to the housing ladder ever more difficult," said Andrew Bridges, managing director of estate agent Stirling Ackroyd.
"Hundreds of thousands of new homes are the only real answer. Mayoral candidates are still reluctant to take on such a massive challenge – but if they want to gain entrance to City Hall on election night, they might have to do more to help Londoners enjoy the success of the house price party.”
The stamp duty rush
In plans announced last year stamp duty will be set at a higher rate from April for any buying an additional home. This has caused a rush among buy to let investors and estate agents trying to push deals through and could be providing a temporary boost to house prices.
"There have been a lot of stimulants spurring on the housing market this spring – and there’s no denying there’s been a palpable buzz in the air," said David Brown, chief executive of estate agent Marsh & Parsons.
"To beat the April 1st implementation of additional stamp duty, second-home buyers and buy-to-let investors have been frantically pushing through purchase completions as quickly as possible. We’ve had documents collected and delivered by hand across London to solicitors to avoid postal delays, and our teams have been in at the crack of dawn to make sure all parties involved in the transaction are meeting their deadlines."
Supply
A long-term factor in the house price story has been a shortage of supply. A lack of supply of been attributed to a number of factors such as strict planning permission and green belt rules, a lack of skills in the construction sector, a smaller number of construction firms, and housing companies restricting land use to push up prices. The slow growth in the housing supply has impacted sales volumes.
“We need to tackle this ongoing crisis with real action if we are to meet the housing needs of current and future generations. Building at least 250,000 new homes a year is a must, but this alone may not be enough as the population grows," said Jeremy Duncombe, director of Legal & General Mortgage Club.
"Innovative new initiatives such as modular housing programmes can dramatically reduce the time it takes to construct a home, providing another important way of working towards this goal. Other measures, such as a relief in Stamp Duty for downsizers, should also be considered, as this will help to free up a vast amount of existing housing stock for those moving up the property ladder.”