British Property Market Shows Signs Of Recovery
News Posted On: 27 November 2012
The British property market is showing signs of a recovery in 2013. Positive signals can be seen in a national house price index published today. The report the Rightmove Index, measures trends in asking prices, inquiries and search activity. All three are up compared to the same time last year. Asking prices have climbed 2%, or £4, 617 – since November 2011, while search activity is up 20% and inquiries are up 11% over the same period. There’s more good news from the Bank of England, too; just a few days earlier, the Bank published figures showing that mortgage approvals had climbed
9.2% over the quarter. The Rightmove Index also showed that while new sellers dropped their asking prices by an average 2.6%, that was the least severe fall for any November over the last three years.
However, the cheerful news from the Bank of England has to be viewed in context too: although the quarter saw a rapid rise, the previous two quarters saw a slump in mortgage approvals to a level not seen since 1993, and their lowest level for eighteen months. The resurgence in the last quarter may indicate that the market has adjusted to the cancellation of Stamp Duty ‘holiday’ laws in March. Some commentators blamed a failure of pricing mechanisms to function normally, because homeowners were holding on to their property until prices rose again rather than responding to falling demand by cutting asking prices. However, this is contradicted by the relatively small drop in asking prices in November. Miles Shipside, housing market analyst at Rightmove, said ‘there are a number of positive trends that justify cautious optimism as the market enters its winter recess.’
Homeowners agreed, according to the Market House Price Sentiment Index. Households are more optimistic that the value of their homes will rise in the next twelve months than at any time since 2010, according to its latest figures. However, the market is obscured by national figures. There’s really a big gap between the performance of the premium market, which is doing very well, and the rest of the housing market whose performance is much more in tune with the economy at large. Further, there’s a geographical divide, essentially between London and the rest of the country.
House prices in London climbed by 5.2%, while UK house prices rose 1.7% over the 12 months to September, according to the Office of National Statistics. The annual change recorded in London by Rightmove was 8.8%, leaving the average property in the city worth £483, 709. The average property in the UK is worth £249, 958, according to the BBC.
London property is therefore valued at 193% of the national average. ‘There’s a two-speed market,’ agrees Mr. Shipside. ‘Sellers in the capital [are] seeing near double-digit price growth in a year while the average for everywhere else remains broadly flat.’ Even with additional allowances for London living many people are struggling to live in London and the housing market there is a precursor for the rest of the country. Premium properties in the shires are sharing London’s boom times while the market in the North and other cities is level or growing only slowly. As the prices of London’s homes are driven up by the influx of wealthy buyers and investors from overseas, lower earners resort to shared renting or leave the capital altogether, furthering the concentration of cash in the capital and further heating the market.
It’s very unlikely that Boris Johnson, who promised to welcome with open arms any French nationals fleeing their Socialist government’s taxation regime, will follow the move made by Hong Kong’s premier and seek to legislate foreign buyers out of the market altogether. But it’s clear that the figures from London are distorting the picture of the UK housing market; unlike the situation in the US it’s not acting as the engine of economic recovery although the stratification of the market is similar. The market may be recovering but it’s a long way from booming in the countryside and the North.
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Written by Les Calvert
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