House prices in England and Wales see fastest annual growth for six months

The annual rate of house price growth across England and Wales increased to 5.2% in October, the fastest increase for six months, according to the latest property index.

Average property prices increased 0.9% or £2,500 last month, equal to £80 a day, to £288,421 and it is the tenth record high recorded this year, the data from the Your Move Reed Rains index shows.

The price growth is once again being driven by London, as values in the city increased £24,636 in the last year, the index also shows. Excluding London and the South East of England takes the annual price growth to 3.9%.

As far as sales are concerned it was the strongest October since 2007, with the north seeing biggest sales boost due to better levels of supply on the market. But sales of homes worth over £1.5 million were down 35% year on year with this sector still being affected by the Stamp Duty change from almost a year ago.

East Anglia saw the strongest year on year rise of any region, with growth of 6.2%, taking the average price for a property in the area to £241,284, Richard Sexton, director of e.surv chartered surveyors pointed out.
He also pointed out that in London house prices are recovering from the more subdued growth seen during the second half of 2014. Annually, there has been a 4.4% price increase in the capital, with property values rising by an average of £24,636.

However, most of the recent price increases have emanated from the lower rungs of the market with Harrow, Newham and Barking and Dagenham showing the strongest annual growth.

‘These rapid rises are currently outweighing the decline at the top of the market, carrying average values higher. While many commentators are forecasting significant house price growth in London and the UK in the coming years, these need to be viewed in historical context and we’re unlikely to see a return to the unsustainable rises of the past decade,’ said Sexton.

‘Most current predictions are still a slowdown from the past five years of growth, and overall since September 2005 average prices across the country have soared 43.5%, while average property values in London have more than doubled, jumping 104%,’ he added.
He also explained that properties worth over £1.5 million have been hit with a stamp duty increase, currently set at 12% of the portion of the property’s value above £1.5 million, up from 5% previously.

‘As a result, sales of homes worth more than £1.5 million have fallen by 35% in the third quarter compared to a year ago. This tax has really put the shackles on the prime market in the capital, as three quarters of these sales since January 2014 took place in London,’ said Sexton.

‘The implications can be seen in the 12.6% annual drop in prices in Kensington and Chelsea, while prices in the City of Westminster have also fallen, 5.5% year on year. Stamp duty has had strong implications for the South East too, with prices dropping in other typically more expensive areas, such as Windsor and Maidenhead,’ he added.
Regionally, the pattern of property sales is the reverse of what has been happening with house prices, with activity increasing fastest in the North, Yorkshire and Humber and North West, but falling in the southern half of the country.

‘Supply of properties on the market seems to be the sticking point for sales growth, and activity in the northern most regions of England is also being facilitated by more affordable prices,’ Sexton explained.

‘With low interest rates now likely to be prolonged into 2017, there should be plenty of momentum to encourage further activity. But so far in 2015, total sales are still 4% down on last year, due to a slower first six months. We will need the current revival to storm through the remaining two months of the year, if we are going to match 2014 sales,’ he concluded.

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