House prices break new record, even as monthly growth falters
- House prices in England and Wales increase £16,446 annually to £290,640, a 6% increase on November last year
- But the monthly rate of house price growth fell to 0.6%, slower than the 0.9% monthly uplift seen in October
- South East overtakes East Anglia as region with the fastest growth in house prices, while London drops to fourth
- Home sales fall 15% in November, with completed sales for the year still 3.4% behind this point in 2014
- Stamp Duty surcharge may cause a late winter surge, as second home buyers and landlords hurry to beat deadline
Adrian Gill, director of Reeds Rains estate agents, comments: “House prices have sprinted to a new record even with a monthly stumble. Annually, house price growth has strengthened, rising 6% compared to this time last year, with a total increase of £16,446, equivalent to £45 each day. While there is a new record high for average house prices at £290,640, there has also been a slowdown in monthly growth to 0.6% in November, down from 0.9% in October. This suggests that despite being within grasping distance of the £300,000 mark, it may be a few months yet before average prices reach this symbolic summit.
“Prices have been powered by the South East, which has now overtaken East Anglia as the fastest growing region in England and Wales. House prices in the South East have risen by an average of 7.1% this month, with values increasing in every local authority in the area. It appears that the double digit price rises first seen in the prime London market – then the other London boroughs – are now rippling out even further to London’s commuter towns, with house prices in Reading rising by 18.3% and Luton increasing 17.3%.
“Home sales have fallen 15% in November compared to October. In direction, a decline of some sort does follow the trend seen last November. But total sales for the 11 months of 2015 so far are still 3.4% lower than the same months in 2014. The housing market will need a Christmas boost to sales to beat last year’s figures. And the Chancellor’s changes could be the gift required.
“House prices soared in the five months following Nigel Lawson’s withdrawal of the multiple mortgage tax relief in 1988. More recently in Scotland, after the Land and Buildings Transaction Tax was announced there was also a surge in the sales of high end properties to beat the deadline. England and Wales may now feel the same forces, as there will be a growth in demand from both first-time buyers with extra financial support and buy-to-let landlords hoping to invest before the tax changes come into force. While the Chancellor has planned to increase the number of houses being built, none of these will be completed in the next few months. As the number of houses on the market is at an historically low level, those rushing for the April deadline will be fighting for a decreasing number of properties. So we could see a spike in both house prices and sales over the normally frosty winter period.