Asking house prices in London have risen to “unsustainable” levels, pumped up by foreign investors – while outside the capital, asking prices fell in two regions over the last month.
Rightmove said this morning that with the exception of London, there is no risk of a house price bubble.
However, it underlined its concerns about the London market, saying that while prices in outer (as opposed to central) London are already more than double those in the rest of England and Wales, average wages are only 60% higher. In central London, asking prices are now within a touch of £1m at £937,110.
Driven by the latest London surge, the average asking house price across Britain is now £252,418 – 2.8% up from £245,495 in September.
In London, the monthly jump was 10.2%, equating to an extra £50,484 in asking prices between last month and this.
It means asking prices in London are nearly £30,000 higher than their previous record, and are 13.8% higher than this time last year.
Asking prices in London had fallen in August and September in a pronounced seasonal slowdown. However, the boom over the last month has reversed this entirely.
Rightmove director Miles Shipside said: “Some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.”
Rightmove said that to satisfy at least some of the demand, London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market.
While the number of sellers in the capital this month is up 15% compared to September, September itself was 12% down on August
Rightmove said that the situation is exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and creating upwards price pressure.
Shipside said: “London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one- and two-bedroom flats to meet that demand. While they can achieve volume sales at premium prices, this eats up a much-needed source of fresh supply and drags up existing property prices at an even faster rate.”
He said that as a result of the imbalance between supply and demand and sharply rising prices, Help to Buy is unlikely to help many buyers in London.
According to Rightmove, asking prices in “the more affordable” outer London boroughs are now £461,937 compared with an average asking price of £226,861 elsewhere.
The regions where asking prices have fallen this month are west midlands and Wales, while five regions, north, north-west, Wales, west midlands and south-west, have asking prices that are lower than this time a year ago.
In seven out of ten regions that do show prices higher than a year ago, price rises nevertheless lag inflation.
Even in the south-east, outside London, asking prices at an average of just over £300,000 are below the levels of July this year.
.png)
Comments
Call it that if it makes you happy Brian.
I do my own research, especially when it comes to making the biggest purchase of my life. No amount of 'missing the boat' type comments are going to sway me from what I've learned about the current state of the UK property market. Facts, figures and analysis do. You seem particularly short of those however.
If you can convince me that today's house prices are sustainable and based upon solid economic foundations, then I'm all ears. Given your preference for trolling over actual debating, I doubt you'd even know how to begin to approach a subject like that.
I've laid out my conditions for admitting I was wrong. Why don't you 'man up' and tell us what it would take for you to admit that UK property is currently in a bubble?
we see little man syndrome.............
When house prices are rising without government support and interest rates are at least 2% above the rate of inflation, then I will eat my hat and post a link to the video of it here.
All I see at the moment is a housing market drugged up on an artificial stimulus. You can get a turd to move if you poke it enough. It's still a turd though.
On that note - lending figures out today showing everything concerning housing transactions is currently negative, except remortgaging. Hardly constitutes a 'recovery'.
Its take a far bigger man to say "I was wrong", go on rant try it, gain some respect.
Hi Jonnie,
Time must fly if it's been six years since I made my first post here in 2011...
At the risk of treading over old ground, house prices are coming down where I am and seemingly not where you are. A recent Land Reg report had my area at -5% over the last 12 months, although I think it's become slightly less negative since then.
I'll be the first to admit that I have been taken aback by how determined The Powers That Be are to avoid a correction though. I'm counting close to a trillion quid that has been thrown at various schemes to support house prices - not bad going when this is supposed a time of austerity!
Behind that, the fundamentals with regard to these prices staying look terrible to me - there's a glut of downsizing Boomers about to hit the market as they retire, the younger generation have ever increasing amounts of uni debt round their necks in a poor job market, the cost of basics like food and heating is rising well above salaries, interest rates are being artificially suppressed until they can go no lower, the government is having to provide loans that the bankers no longer will... The housing market isn't recovering on it's own, far from it - it's needing ever greater amounts of artificial support as far as I can see.
Last month our beloved Chancellor said he had asked the Bank of England to monitor house prices and make sure there was no bubble. This week, one of the Bank of England's Monetary Policy Committee members has said it is not the Bank's responsibility to oversee house prices. So, as in 2008, there is no-one with their foot on the brakes. Can the Tories spin this out until the election?
As someone who has some reasonably balanced views, what's your take on this news? Asking prices in London up 10% in a month can't be sustainable for long, shirley?
Hi Rant,
Good to see you here as always.
You've remained consistent on the house price subject but you must agree that you haven't called it right and a lot of time has passed meaning you keep pushing the date out for a HPC and are years off where you started.
What do you think 2014 will bring, it will be our 6th year on here together, is 2014 the year?
Jon
Bit quiet under your bridge today eh Brian?
I'm flattered that you think people listen to me though.
Well, what can I say? Salaries are increasing at less than 1% a year, food prices are going up five times faster than that and heaven help anyone who has to switch on the heating this winter. After that, there's plenty of money to pay for higher rents and property prices though, so I'm sure all of the government's efforts to further inflate the property bubble are going to end well.
"Rents across England and Wales have overtaken all previous records, two new buy-to-let surveys have found. A third report has also found steep rent rises in Scotland" See more at: http://www.lettingagenttoday.co.uk/news_features/Rents-rise-to-new-record-highs#sthash.Zfi8NZm7.dpuf
Well done rant, cost everyone more who listened to you, either higher rent or prices! Top man.
I don’t agree with lefties like first post, we are not some offshoot communist state that controls.
I don’t however agree with the current gov initiatives. In my view they should concentrate on getting business to move from the heated SE into the areas that need work and jobs, people would move there if they could live. Create sustainable employment is far better use of government/ tax payer cash.
Where is the affordable housing stock going to come from? Even Housing Associations now are becoming developers for profit.
Supply is definitely the problem - but in a closed environment it is difficult just to "make" new room.
Yes you can sort brownfield sites and others, but this process takes years and came to a complete halt because of the credit crunch.
Costs of building an average property are now £150 per square foot - this cannot be manipulated because there is an international commodities market (for the materials) and there is a national minimum wage (for your labour costs).
That means that no matter how clever a developer you are, building a 100m2 starter home is going to cost £150,000.
This does not take in to account various Green initiatives, Section 106 payments, apportioned losses due to the social housing elements that are often given away to appease the council.
The price for the land will be (in major part) dictated by its transport links to Central London - the easier it is to get there (on average) the higher the price.
Add in professional (and unprofessional) fees, finance costs and of course a profit margin after tax and the price sky rockets.
I work in Epsom and New Build values are about 400ft2.
From what I can tell the developers are doing well enough, but the quality of fittings is pretty poor - the surface looks OK but I guarantee that in 5 years when people come to re-sell there are going to be all levels of hell.
No, the demand doesn't need to be satisfied, it needs to be reduced. No overseas investors or second homers or buy-to-lets allowed would allow prices to get to a reasonable level where ordinary folk could afford to live where they work, as it was when I was younger. Why should our country be concreted over and working people spending hours each day commuting in order to 'satisfy' the rich, non-resident and foreign investors? It is immoral to say the least, unsustainable in the long run.