Last month, the differential between the housing markets in the South East of England, including London, and the remainder of the country continued to widen, In terms of both absolute prices and the rate of price growth.
The LSL Property Services/Acadata England & Wales House Price Index for August found that during the month, house prices in the whole of England & Wales rose by an average £2,500, or 0.9%.
If Greater London is excluded from the calculations, then the increase in prices throughout the remainder of England & Wales was on average £1,125, or 0.5%, while if both Greater London and the South East region are excluded, then the increase for the remaining parts of England & Wales was on average £500, or 0.3%. The inclusion of Greater London and the South East thus contributed £2,000 of the £2,500 change in the average house price seen over the month, giving a real sense of the differences that exist across the market.
The average price paid for a property in England & Wales during August, including Greater London and the South East, was £274,302. This figure falls to an average £185,496 if we exclude Greater London and the South East, a difference of £88,806. This is the largest differential in these average prices since our records began in 1995.
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% in the past year, or less than half of the overall measure of 10.7% 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.
“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.”