House prices in London smash 2008 peak
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Property values in London are now nearly 48 per cent higher than their pre-economic downturn peak, reached in early 2008, according to Office for National Statistics (ONS) figures. Average house prices have increased by 7.2 per cent annually, taking them to a new record of £531,000 on average.
Nationwide, house prices also reached a new record high of £286,000 on average in September after jumping by 6.1 per cent over the last year. The typical value of a UK property edged up by £1,000 month-on-month from a previous all-time peak of £285,000 reached in August.
The ONS attributed the price rises leading to these record-breaking prices to a continuing lack of supply, coupled with an increase in demand from buyers.
The Bank of England’s November Inflation Report stated that housing demand remains strong, reflected in a 3.9 per cent increase in mortgage approvals in Q3 2015, while economic growth and a recovering jobs market have kept demand for property steadily high.
Meanwhile supply remains low, with the ONS Output in the Construction Industry release for September reporting a 3.9 per cent fall in new housing construction in the year to September.
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These findings were supported by the Royal Institute of Chartered Surveyors’ Residential Market Survey for September, which found a Catch 22 situation where potential vendors are put off listing their homes for sale because of a lack of suitable homes to buy.
Henry Gregg, assistant director of communications and campaigns at the National Housing Federation, said: “There simply aren’t enough homes being built and with demand rising, prices are being pushed further out of reach of aspiring home owners.”
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Mark Harris, chief executive of mortgage broker SPF Private Clients, backed up these claims. He said: “The average house price in London is now £531,000, highlighting why it is so difficult for someone on an ‘average’ income to get on the housing ladder in the capital.
“Even if buyers can save up the deposit required, their income may simply not support such a large mortgage, making it very difficult to buy on your own.
“There are an increasing number of options for first-time buyers with many lenders offering high loan-to-value deals. However, with the average price paid by a first-time buyer now £216,000, that still means saving at least £11,000 for a deposit, plus moving costs, and a salary of around £50,000.”
However, a Department for Communities and Local Government spokesman said: “We have got Britain building again, with the latest figures showing a 25 per cent increase in the number of new homes over the past year.
“Government initiatives have helped more than 230,000 people to buy since 2010, and we are delivering 200,000 new starter homes, which will be available at a 20 per cent discount to first-time buyers.”