London Continues To Buck Housing Market Trend Amidst Falling House Prices
Although average prices in England and Wales decreased in July, London property prices continued to buck the trend in the UK housing market, with the largest monthly and annual price jumps in the 12 months to July, The Times has reported.
According to Land Registry data quoted by The Times on August 30, the average price of a home in England and Wales was £162,900, a 0.8 percent increase from the previous month. On an annual basis, prices were up by 0.3 percent. But the upward movement was likely due to an observed increase in London house prices, with property prices in the capital increasing by 2.7 percent over the month and as much as 6.5 percent over the year and with the average price of a home in London reaching £368,000.
Away from London, the biggest monthly drop was recorded in the North East, where prices fell by 2.1 percent in July, reaching £98,557. The North West followed with a 1.7 percent drop for the month, giving an average house price for the region of £109,235, and also experienced the greatest annual price fall with a decrease of 3.9 percent. Yet despite these falls The Times quoted Mark Harris, chief executive of the mortgage broker SPF Private Clients, as observing that the Land Registry data was “less gloomy” when compared with other house price indices.
!m(/uploads/story/324/thumbs/pic1_inline.png)The Times noted that in May 2012 the number of completed sales in England and Wales rose by two percent relative to a year earlier. In addition, the number of properties sold in England and Wales for more than £1 million in May increased by as much as 107 percent compared with May 2011.
Meanwhile, The Times also reported that the number of mortgage approvals rose slightly in July, partly recovering from the 18-month low observed in June. According to Bank of England data, mortgage approvals rose to 47,312 in July, from 44,124 recorded in June, whereas net mortgage lending increased by £1.13 billion from the previous month. Economists have warned nevertheless that a significant market recovery is still a long way off, pointing to the modest rate of increase and to a weak underlying market. ”Despite this month’s rise in approvals, demand for mortgage lending will remain subdued whilst the economy is contracting, confidence is low and house prices are drifting lower,” noted Matthew Pointon, property economist at Capital Economics, as quoted by The Times. And as recently noted by Bloomberg, mortgage approvals are still at less than half their monthly average in the decade to 2007, before the financial crisis struck.
The Bank of England recently launched its Funding for Lending scheme with the purpose of encouraging banks to lend into the housing market, by providing them with cheap access to funding. But it’s still too early to predict the impact of the programme on house prices. The Times quoted SPF’s Harris as observing that “The jury is still out on whether the Bank of England’s emergency funding will have the desired effect.”
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