The average house prices in the UK property market have formed a gap between the South East and the rest of the country, according to the LSL House price index.
The average house prices in the UK property market have formed a gap between the South East and the rest of the country, according to the LSL House price index
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The results have shown the biggest price disparity since 1995, following the cooling of houses prices in UK regions.
The average house price now stands at £274,302, however only £185,496 omitting London and the South East.
Commenting on the figures, Richard Sexton, Director of e.surv chartered surveyors, part of LSL Property Services, said: “A game of two halves is being played out in the UK property market. In terms of average house price growth, a gap has developed between the South East corner and the rest of the country. If we exclude the key players of London and the South East from the game, a whole different playing field is revealed.
“House prices across the remaining parts of England and Wales have only increased 4.3 per cent in the past year, or less than half of the overall measure of 10.7 per cent when we include London and the South East. In absolute terms the difference would seem to add £88,806 to the average price tag for a home across England and Wales – the highest absolute difference since 1995.
“This obscures cooler prices in much of the country. Further afield, it is critical that support mechanisms like Help to Buy aren’t dismantled. In July, house price growth slowed across all regions except for London, the South East and East Anglia. While these three regions continue to set new house price highs, the rest of the country is nowhere near these levels of growth.”
Richard added: “Compared to the nadir of 2008-2012, activity in the housing market has improved, but is not completely out of the woods yet, and still needs to recapture some of the vitality of its pre-recession health.
“There is also much more to be said beyond the headlines for London. The annual rate of growth in London house prices is the fastest witnessed since 2000. Most recently we’re seeing asking prices in the capital start to be reined in, which will apply the brakes on annual house price inflation as the market steadies.
“What’s happening in London may be eye-catching, but it is akin to looking through a kaleidoscope – and skews any view of the current total housing landscape. Peeling back the regional layers gives a much more informed view of the core reality of the current housing market. With evidence of London starting to cool off after strong growth earlier in the year, it is critical that the underlying momentum that has stimulated much needed increased volume in the rest of the market is allowed freedom to keep moving, whilst any price rises are kept steady and under control.”
According to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor, it was also found that the figure of monthly house purchase approvals fell to 63,485 last month, resulting in a near five per cent decrease, due to the mortgage market slowing down for summer.
It was found that since the start of June, monthly house purchase approvals have fallen a staggering 5.4 per cent.
The report stated that the decrease was down to the holiday season, rather than an impact of MMR, as well as uncovering that 18 per cent of house purchase approvals are from higher LTV lending – the largest proportion since 2008.
The results also showed that the latest figures from the DCLG show that to date, the Help to Buy scheme has had the biggest impact outside of London and the South East. The mortgage guarantee scheme and equity loan scheme combined made up the greatest proportion of total mortgage lending in the east of England at 6.2 per cent, followed by the North West and Scotland at 3.8 per cent and 3.7 per cent respectively.
Richard Sexton added: “The Help to Buy scheme is playing a vital part in keeping the market ticking over, by allowing beleaguered borrowers to get onto the property ladder before prices climb permanently out of reach.
“It is still a crucial cog in the recovery in many areas of the county. The economic revival is starting to fan out from London and the South East, but many regions of the country are yet to feel its full effects.
“Areas like the North West and Yorkshire & Humber have fewer cash-rich borrowers – and are more reliant on the government scheme. They are in a fragile balance of recovery, and prematurely removing the scheme could set-back their progress. But that’s not to say that Help to Buy is perfect. Regionalising the scheme would further help direct support to the regions where it’s needed the most.”
By Beth Fisher
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