- Eleventh monthly rise in succession, as prices climb £2,326 in May
- Average house prices reach a new peak of £266,013
- Driven by price growth in London – but signs show capital is cooling at the top end
- Considering CPIH inflation, only London and the South East see ‘real’ house price growth since 2005
David Newnes, director of Reeds Rains estate agents, owned by LSL Property Services plc, comments: “Average house prices across England and Wales have climbed £20,938 in the past year. This 8.5% rise is the highest annual increase we’ve witnessed since August 2010, when the housing market was edging back from the throes of the financial crisis, and brings average property prices to a new peak of £266,013.
“As the vigorous health of the UK housing market catches international and media attention, all eyes have been on how the government and regulators will react. However, the growing clamour for intervention neglects the fact that when taking inflation into account, only London and the South East have seen house price growth in ‘real’ terms since January 2005. London is in a league of its own, with prices climbing 13.3% on an annual basis. When you take the capital out of the equation, average prices across England and Wales have risen just 6.3% in the last year to £221,212. This price difference is the largest since our records began.
“The national recovery is gaining strength, bringing with it renewed consumer confidence and a ‘feel-good’ factor to millions of households. In the past twelve months prices have risen in 91% of the unitary authorities across England and Wales. In fact, in April new record prices were reached in Cardiff, Bristol, Northamptonshire and Cambridgeshire, as growth spreads out from the capital and reaches across the rest of the country.
“Annual growth in house sales slowed in May, potentially as a side-effect of the Mortgage Market Review (MMR) rules introduced at the end of April that have lengthened the mortgage approval process.
“There are other indications of a cooling in the market – particularly at the top end of the spectrum in London. In total, twelve London boroughs have seen prices fall in April, with the exclusive Prime Central boroughs of Kensington and Chelsea and the City of Westminster seeing the largest monthly drop in house prices – down 2.7% and 2.9% respectively since March 2014.
“But outside of the capital, the Help to Buy scheme continues to help first-time buyer demand, the engine driving some of the activity in the regions. If supply could follow suit, this would sustain the housing recovery and could help restore some equilibrium across the country.”