MortgagesJun 11 2015

House prices hit a high but London growth slips

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House prices hit a high but London growth slips

Average house prices in England and Wales hit a new high of £277,178 in May – the fourth price record set this year – according to LSL Property Services’ house price index.

Monthly property price growth picked up to 0.4 per cent, but was still only a third what it was a year ago, with London knocked into fourth place in regional growth rankings of growth, while price rises accelerated in the North.

Home values in Kensington and Chelsea are now 16 per cent below their autumn 2014 peak, as higher stamp duty bites.

Last month, LSL’s statistics showed that East Anglia had overtaken London in terms of house price growth, down from 9 per cent in February to just 6.8 per cent in March.

Meanwhile, home sales in May were down 14 per cent year-on-year, as lack of supply suppressed housing market activity.

Meanwhile, separate data from Connells Survey and Valuation showed an acceleration in property valuations for buy-to-let landlords at the same time that first-time buyer activity has retreated.

There were a third more buy-to-let valuations conducted in May than at the same time last year, while valuations for first-time buyers declined by 4 per cent over the same period.

On a monthly basis, May’s buy-to-let valuations were up 3 per cent on April, while valuations for first-time buyers fell 2 per cent between the two months.

John Bagshaw, corporate services director at Connells, said the picture painted is a consistent one, with fewer people looking to buy their first home meaning more tenants are sticking to the rental sector.

He said: “As such, new landlords enter the market and those already in the sector grow their business to capitalise on the increased demand. Yet what remains unclear is how long this contrast in fortunes will continue.”

May’s remortgaging figures also outperformed the overall housing market, with these valuations up 9 per cent on April, equating to a 31 per cent increase on the number of remortgaging valuations since May 2014.

Mr Bagshaw said that record low mortgage rates are the main reason for this trend, “and with inflation still near zero and flirting with a negative reading, the Bank of England is likely to play it safe and keep rates at bargain-basement levels for the foreseeable future”.

peter.walker@ft.com