Land Registry statistics for Q2 2014 show that global demand for Prime Central London (PCL) residential property continues to increase, according to London Central Portfolio (LCP).
Sales volumes reached 6,546 over the year, an increase of 19.34 per cent over last year, the highest level since 2007.
Property prices also continue to rise but with no sign of a so called ‘bubble’. The annual growth has been 10.09 per cent. This compares with the long term average since January 1996 of 10.5 per cent p.a., which includes the downturn during the credit crunch. This brings the average price to GBP1,638,456.
Greater London saw stronger growth than PCL in Q2, at 12.09 per cent vs. the previous annual quarter, however the annual growth is less, at 8.53 per cent vs. the preceding year. The average price now stands at well over half a million pounds, at GBP533,489.
Q2 2014 also shows a positive picture for the national housing market but not the extreme picture frequently painted by market commentators. Price growth in England and Wales in Q2 was 5.97 per cent vs. the same quarter last year and annual growth was 4.46 per cent. This only represents actual price growth of 15.1 per cent since 2007. Transactions however, have increased a monumental 30.93 per cent, almost one third over the year, resulting in the 848,767 transactions, the highest level since 2007.
Naomi Heaton, chief executive of LCP, specialist fund and asset managers, says: “This suggests that the housing stock is still accessible to the domestic market and that it has been a question of waiting for more positive economic sentiment to stimulate activity. However, with the introduction of mortgage caps and the prospect of interest rises on the horizon, this increased activity may well subside.
“It is a fact that the housing market tends to be self-regulating, highly sensitive to the state of the economy, employment and mortgage rates. Direct outside intervention to moderate growth is therefore uncalled for and the consequences may well not be predictable. Government actions however, such as the introduction of mortgage caps are valuable, not in cooling down the market but in ensuring that borrowing levels remain prudent and future proof.”
At GBP256,883, the average property price in England and Wales is now firmly over quarter of a million pounds, suggesting the government should urgently address the jump up in stamp duty from one per cent to three per cent at the GBP250,000 price point.
Heaton says: “This would crucially help open up the market to first time buyers, for whom finding an additional GBP5,000 of stamp duty may make it impossible to save up for their deposit, at a time when mortgage levels are being capped on lower multiples of salary than before.”