Interest in expensive London homes drives UK property prices
UK house prices rose faster last month than they have in a year, thanks to a rebound in London’s most expensive homes, a strong performance in England’s east and new price heights reached in Merseyside and Birmingham.
The average UK property price is now £297,832, according to a report by Acadata and LSL. However, annual price growth has dropped slightly, to 2.4 percent - the lowest it’s been since 2013.
The 11 most expensive London areas saw an average increase of 0.8 percent in January - double the London average, rising by £7470.
Data for January shows London property prices rose 0.4 percent from December, ending a two-month period where prices declined. The increase is due to gains in the capital’s most expensive properties.
Acadata noted that London’s property market still “faces challenges”, pointing out that the 0.4 percent gain was the weakest in almost five years, and transactions have dropped by 22 percent during the last three months compared to the same period a year ago.
The slowdown is thought to be down to three factors: the Brexit effect, tax changes and lack of affordability. Lloyds Bank figures last month showed the average property price in the capital is now more than ten times annual earnings, while Halifax data last week showed property prices in a third of the UK have risen more than the average worker salary over the past two years.
The biggest gap was seen in Haringey, north London, where house prices rose by an average of £139,000, outstripping the average take-home earnings by £91,000.
In contrast, in the North East, Scotland and Northern Ireland earnings exceeded house prices.
The news comes after the recent release of OBR’s projections for house price growth, claiming house price rises will slow over the next five years, dropping from 2016’s figure of 7.6 percent to just four percent next year.
In 2019 growth should edge upwards to 4.4 percent, the report claims, hitting 4.6 percent in 2021.
The trend mirrors that of disposable incomes, which are forecasted to stagnate this year.