LSL Property Services and Acadata have reported that in November, the average price paid for a home in England & Wales was £280,733. This was an increase of £2,277, or 0.8%, over the previous month. It sets another new peak average price for England & Wales, for the 17th month in succession.
On an annual basis, average house prices in England & Wales have risen by £28,560, or 11.3%, since November 2013. This represents an increase of 0.3% from the 11.0% recorded last month. The annual rate of 11.3% is the highest it has been since January 2005, although this is still only half of the 22.5% experienced in December 2002.
The average price of a home in England & Wales is skewed by house prices in Greater London and the South East of England. The annual rate of house price inflation falls to 7.9% if Greater London is excluded, and to 5.7% if we exclude both Greater London and the South East. The difference between the annual rate of house price inflation for England & Wales as a whole, at 11.3%, and the rate excluding London and the South East, at 5.7%, is 5.6%. The divergence in these two rates is the largest we have on record since we started monitoring this metric in 2005.
A major change took place in the housing market in November, in that the estimated number of transactions fell by 20% from the levels recorded in October. It is the first time in 20 months that sales volumes have fallen below those achieved in the same month one year earlier.
David Newnes, director of Reeds Rains and Your Move estate agents, said: “These figures are spurred on by London and the South East, where the housing recovery has been fast-tracked. When these regions are removed from the calculations, a calmer 5.7% annual rise in house prices materialises, the largest divergence on record.
“After a temporary hiatus at the highest tiers of the property market, growth has rallied again in the capital – with values in prime spots such as Kensington and Chelsea, and Hammersmith and Fulham surging 5.3% over the course of the month, hitting new price records along the way. Overall, average house prices in London are now 1.9% higher than September, rebounding back from a more moderate 0.8% increase the previous month, and driving annual price rises to 19.7% in the year to October 2014.
“Yet after a solid advance in activity throughout 2014 to date, completed house sales withdrew last month, from a particularly busy October. House sale completions in November also dipped below the level witnessed a year previously. This doesn’t undermine the strength and stability of the growth in activity experienced over the year as a whole in some locations – for instance, completions have jumped 58% in Slough in the last year, propelling an 18.5% increase in average house prices in the area over this time.
“Breaking up the outdated and unloved slab system of Stamp Duty should also allow activity to build further at the bottom rungs of the ladder, facilitating hefty savings. This should help erode the up-front barriers of purchasing a home for the significant majority of buyers – and sellers may feel the benefit of weightier demand, as well as being able to price their homes more realistically, without having to tactically negotiate threshold barriers. Meanwhile, the impact on the top end of the market isn’t as black and white as it may seem at first glance with properties ranging between £1 million and £1,125,000 liable for less stamp duty than before although above that there are no winners.
“In the year to September 2014, 69% of completed house sales on properties worth £1,125,000 or more were in London, and a further 19% took place in the South East. While these more expensive regions will bear the brunt of stronger Stamp Duty tax at the highest levels, the largest savings under the new rules will actually be on homes priced just above £1 million, where buyers will find themselves £6,250 better off.”