Property prices in England and Wales increased by 4.6% in July year on year, taking the average property value to £183,861, according to the latest data from the Land Registry.
Month-on-month they increased by 1.7% with the East of England seeing the largest monthly rise of 2.8% and the biggest annual price increase with a rise of 8.9%, the data also shows.
The North East saw the lowest annual price increase of 0.4% and Wales saw the only monthly price decrease with a fall of 0.3%.
But transactions are down. The number of completed house sales in England and Wales decreased by 15% to 65,619 compared with 77,488 in May 2014. From February 2014 to May 2014 there was an average of 70,029 sales per month. In the same months a year later, the figure was 61,283.
The Land Registry figures also shows that the number of properties sold in England and Wales for over £1 million decreased by 21% to 878 from 1,113 a year earlier.
John Eastgate, sales and marketing director of OneSavings Bank, pointed out that it is the biggest monthly rise in house prices for a year and he believes it is driven by positive sentiment continuing after the general election and also by the lack of houses on the market for sale.
“The simple fact that demand exceeds supply will continue to push house prices upwards and as long as that is the case, it’s hard to see prices moderating. The mortgage market remains supportive, and low rates aren’t going anywhere.” he explained.
“If economic turbulence from China pushes back a base rate rise until late 2016, as it appears to be doing, we may well see even more people capitalise on low mortgage rates to take their first step on the ladder.” he added.
Adrian Gill, director of Your Move and Reeds Rains estate agents, pointed out that there is still a considerable gulf between the rates of growth in the East, South East and London and other regions, but this hasn’t knocked confidence nationwide.
What happens in London is being affected by outside factors, according to Peter Rollings, chief executive officer of Marsh & Parsons: “As the first port of call for international investors and prime property purchases, the housing market in London is more exposed to regulatory and stock market turbulence than the rest of the country.” he said.
“We’re still experiencing tremors from the new Stamp Duty banding, and as demand for million pound homes has eased, the harsher taxes at the top end may continue to rock the boat in London for the coming months. But this all needs to be kept in perspective. London is still achieving significantly above average house price growth, and retains its position at the top table.” he explained.
“In addition, the Chinese stock market slump may present more of an opportunity than a threat to the London property market as while it’s made property more expensive for Chinese buyers, those looking for a secure capital investment in these volatile times will still be attracted to the stability of the returns to be made in the capital.” he added.
Jonathan Hopper, managing director of the buying agents Garrington Property Finders, believes there should be concerns about supply with the fall in sales demonstrating that buyers outnumber sellers by far: “The result of this is a rise in prices almost across the board, although the notable exception is the prime property market, which is still reeling from the rise in the top rate of Stamp Duty. Mortgages remain cheap and real wages are growing briskly, all of which is stoking buyer confidence and spurring on demand.” he said.
“The stock market turmoil and the deflationary pressure of falling oil prices mean the Bank of England will be in less of a hurry to raise interest rates. So with the cost of borrowing likely to stay low for a while longer, some buyers may be tempted to stretch themselves.” he explained.
“But sellers should resist the temptation to see the current constrained supply as a licence to keep increasing asking prices. For all their enthusiasm, buyers remain astute and sellers must be wary of letting their pricing ambitions run away from what the market will tolerate.” he added.
Source: Property Wire