There has been a turnabout in the annual rate of house price growth in October, as prices increase by 5.2% over the last 12 months, up from a rate of 4.5% recorded in July 2015, according to the latest house price index from LSL Property Services and Acadata.
This means the 11-month period of successive declines in the annual rate of house price growth has come to its end, and it is now climbing again.
The average price paid for a home in October was £288,421, up £14,211 on October last year, the tenth new peak for house prices this calendar year. On a monthly basis, prices in October increased by 0.9% or £2,443, from September levels.
The report said the price revival is being driven by London, as values in the city rise £24,636 in the last year, equal to 75% of a typical Londoners salary.
However, sales of homes worth over £1.5 million down 35% year-on-year, as steeper Stamp Duty continues to bite.
Richard Sexton, director of e.surv chartered surveyors, said: “There has been somewhat of a Halloween resurrection in house prices this October, as annual growth finally comes back to life. House prices across England and Wales are now 5.2% (£14,211) higher than a year ago – an uptick from 4.7% in the twelve months to September. As growth jolts back into action, this is the fastest annual rise in house prices recorded for six months, since April. In addition, a more spirited monthly price hike has taken property values to a new high – their tenth consecutive record this year – with average home values increasing by £2,443 (0.9%) during October, equal to rising £78.81 a day in cash terms.
“This reawakening of price growth has been driven by London and the South East, the fastest growing regions across England and Wales. East Anglia has experienced the strongest year-on-year rise of any region, with a 6.2% annual increase in house prices taking the average price for a property in the area to £241,284.
“In London, house prices are recovering from the more subdued growth seen during the second half of 2014. Annually, there has been a 4.4% price increase in the capital, with property values rising by an average of £24,636 – roughly 75% of a typical Londoner’s salary. However, most of the recent price increases have emanated from the lower rungs of the market; with Harrow, Newham and Barking and Dagenham showing the strongest annual growth. These rapid rises are currently outweighing the decline at the top of the market, carrying average values higher.
“While many commentators are forecasting significant house price growth in London and the UK in the coming years, these need to be viewed in historical context and we’re unlikely to see a return to the unsustainable rises of the past decade. Most current predictions are still a slowdown from the past five years of growth, and overall since September 2005 average prices across the country have soared 43.5%, while average property values in London have more than doubled, jumping 104%.
“The Chancellor’s intimidating Stamp Duty remodel is still spooking the top end of the London market. Properties worth over £1.5 million have been hit with a stamp duty increase, currently set at 12% of the portion of the property’s value above £1.5m, up from 5% previously. As a result, sales of homes worth more than £1.5 million have fallen by 35% in Q3, compared to a year ago. This tax has really put the shackles on the prime market in the capital, as three quarters of these sales since January 2014 took place in London.
“The implications can be seen in the 12.6% annual drop in prices in Kensington and Chelsea, while prices in the City of Westminster have also fallen, 5.5% year-on-year. Stamp duty has had strong implications for the South East too, with prices dropping in other typically more expensive areas, such as Windsor and Maidenhead.”