The latest figures have indicated to property investment expert Simon Morris that average UK house prices rose in the year to August 2015.
House price growth
The Office for National Statistics (ONS) supplies monthly house price indexes. These show that the average UK house price expanded 5.7% in the year to June 2015 (5.2% without London and the South East of England). Yet growth dropped in the 12 months to July 2015; ONS figures indicate that average UK house prices grew 5.2% within this period, and 4.4% when London and the South East of England are removed from the equation.
The ONS has now released its August 2015 House Price Index. This indicated that growth stayed steady, with the average UK house price again expanding 5.2% in the year to August 2015. What was interesting was that when London and the South East were taken away, average UK house prices grew 4.8% within this time frame; a higher rate of expansion than in the year to July 2015.
Growth around the UK
The ONS statistics suggest that house prices rose 5.6% in England, 0.8% in Wales, 2.9% in Northern Ireland, but dropped 0.9% in Scotland. The growth of average house prices in England was driven by residential property value expansion rates of 8.8% in the East and 7.4% in the South-East. Average house prices in the North-East of England grew 2.9% in the year to August 2015, after declining 0.7% year-on-year to July 2015.
The Index also made it clear that the London residential property sector performed well during the 12 months to August 2015. House prices within the UK’s capital city expanded 4.2% over this period, and London continues to be the English region with the highest average residential property value, at £522,000. This could spur London property development to greater heights; something Simon Morris recently argued could be facilitated by the emergency summer budget.
Explaining market activity
Adrian Gill, the director of Reeds Rains and Your Move estate agents, noted that solid activity at the bottom of the property ladder and steady demand are fuelling house price growth. He was quoted by Property Wire saying: “The cheaper northern regions are experiencing the fastest growth in property sales, while a shortage of property stock on the market in the south is slowing activity.”
Gill went on to say that “the most frequently paid property price across England and Wales is just £125,000, mirroring the level at which stamp duty becomes payable, and reflecting the impetus that has been injected in the first-time buyer market recently.” He elaborated: “It is also the lower to mid-range properties priced between £180,000 and £360,000 which are seeing the fastest increases in value, while the shift in stamp duty bands continues to slow growth at the higher end of the market, and prices above £600,000 are largely stationary.”
The director also said: “Despite this, London is firmly back in the driving seat of property price rises, following a slight pit stop, and is having a much greater influence on national measures of price growth on an annual basis. As in the rest of the country, it’s the more affordably priced London boroughs which are behind this renaissance, as the strengthening of sterling, rising stamp duty rates and moves against non-doms take their toll on the high end market.”
In Simon Morris’ opinion, the ONS’ August 2015 House Price Index indicates that London’s residential property sector continued to measure admirable growth. Investors may take this as sign that now is the time to invest in the sector, but they should proceed with caution and conduct extensive search, before entering London’s residential property market.
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