‘Unsustainable’ 10% surge in London house prices smashes previous high amid …

By
Matt West

PUBLISHED:

06:36 GMT, 21 October 2013

|

UPDATED:

08:47 GMT, 21 October 2013

House prices in London are rising at
‘unsustainable levels with the average asking up now £30,000 higher than
their previous July peak, a report showed today.

Property website Rightmove said the onset of autumn saw national average asking prices rebound by 2.8 per cent in October – reversing September’s 2.8 per cent decline – and rise 3.8 per cent on the same time last year. The average property was worth £252,418, up almost £7,000 in a month from £245,495 in September, the website said.

But in London, after the summer lull saw
a slight drop in properties being listed for sale and slight
price falls, new seller numbers surged 15 per cent while asking
prices shot up 10.2 per cent in October.

Patchy: House prices are rising in some regions but at below the rate of inflation while in other regions they have fallen

The average asking price in the capital is now 5.6 per cent or £28,852 above July’s record of £515,379, equivalent to an average growth rate of 2 per cent a month over the past quarter.

And with affordability in London stretched to near breaking point, Rightmove said the second phase of the Government’s Help to Buy scheme was likely to have little impact on the lives of ordinary Londoners.

Buyers in the capital were already facing income challenges that would restrict their borrowing capabilities rather than difficulties finding a deposit, the website said.

Average prices in outer London of £461,937 are more than double those in the rest of England and Wales at £226,861. But average wages are around 60 per cent higher in the capital, meaning Londoners are struggling to service ever increasing mortgage debt.

Elsewhere in the country, two regions – Wales and the West Midlands – recorded a fall in average prices in October. House prices in five other regions – the North, North West, Wales, West Midlands and the South West – remained lower than a year ago.

Rebound: After falling for two consecutive months during the summer lull, house prices have begun to rise again

Seven in ten regions saw house price rises that lagged behind inflation. Only London, the South East and East Midlands saw house prices rise by more than retail price inflation of 3.2 per cent .

The South East remains the natural recipient
of increased demand given the extreme supply shortages in London.

Asking prices rose 2.3 per cent in October although they remained
2.1 per cent behind the peak of £330,612 achieved in July this year.

Rightmove director Miles Shipside said: ‘Fewer sellers coming to market in the capital during the traditional summer recess resulted in total price falls of 4.3 per cent over August and September.

‘However, this month’s rebound in the number of sellers brings the quarterly growth figure back
into line with the recent trend at around 2 per cent a month.

‘Although not sustainable in the longer term, 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.

Capital trends: Some estate 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

‘Unsurprisingly, many of this month’s best performers are boroughs in inner London.’

He added London needed to see an increase in housing supply to meet heightened demand which would only come from more houses being built and more owners putting properties on the market.

Rightmove said the situation in London was exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and creating upwards price pressure.

Mr 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.’

The Rightmove house price report is the latest in a long line showing significantly higher activity in the housing market.

Last week, the Council of Mortgage Lenders said lending in the three months to the end of September rose at the fastest rate in five years.

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Clarissa85,

newyork, United States,

9 minutes ago

my buddy’s mother-in-law makes $80/hr on the laptop. She has been laid off for 10 months but last month her pay check was $13753 just working on the laptop for a few hours. pop over to this website
———- www.BBC13.CoM

caravanman,

new romney,

37 minutes ago

majority of londoners are people on housing benefit with 6 kids, no wonder the rest of us are skint .

Raj p,

Wembley, United Kingdom,

47 minutes ago

At some point even the home owners will be getting scared by the rises.

When praises are rising 7K a month, we’re not talking house price rises any more, we’re talking currency collapse.

John,

Cambridgeshire,

56 minutes ago

When governments interfere in markets with schemes to help people buy ,then prices will only go one way. A large percentage of buyers in London and places like Cambridge are overseas buyers, seeing the UK housing market as a safe haven for their money. A lot of the top end flats and houses in Cambridge are never marketed in this country and are advertised overseas.In the poorer parts of Cambridgeshire estate agents are saying property now going on first viewing as people are anxious to buy As long as the taxpayer backed scheme keeps going the government will achieve its aim of getting re elected on the back of the feelgood factor of everyone feeling richer from soaring house prices.In their euphoria the people will once again forget what happened in the past and look to make money from their property to buy the things their wages do not allow them to .Many think that using your house as a cash point is normal and those times are about to return.What can possibly go wrong!!

lisa3,

london,

1 hour ago

who cares? Londoners are all millionaires

olli,

London, United Kingdom,

26 minutes ago

What a flipping nonsense.

Stu Pidd,

Smarter than the ave DM reader,

1 hour ago

There is a Grade 2 listed mansion in Kensington set in an acre of grounds on the market for £65 million. There’s a FLAT overlooking Hyde Park in Knightsbridge for £68 million. How can first time buyers afford these prices?

Vampire,

London,

50 minutes ago

£65 million is a little high for a first time buyer, but you can buy plenty of flats for between £10-20 million on the fringes of the capital, that will really appeal to FTBers.

londoncharlie,

London,

1 hour ago

Lunacy ..pure and simple

tom,

London,

1 hour ago

The answer is to make the UK less London-centric.

– simonk, London, United Kingdom, 21/10/2013 07:37 am

How exactly do you plan on doing that ? People and business want to be in London . You can not force people to relocate unless we want to live in a totalitarian state , which I do not .

Romford_Dave,

Essex, United Kingdom,

53 minutes ago

They could always site the new nuclear power station in London rather than in Somerset. That might help cool the love affair with London and totally non-totalitarian too

Jetty,

London, United Kingdom,

1 hour ago

People ‘ask’ and then drop to a realistic price to get what they wanted. Do we need to evacuate now?

Debtslave,

derby – uk,

1 hour ago

Bring on the collapse. This County won’t recover until prices drop!

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‘Unsustainable’ 10% surge in London house prices smashes previous high amid …

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