Average UK property price rose 4.7 per cent last year adding about £3,300 to the cost of buying a typical home but London growth slows markedly
Growth in UK house prices has slowed but remains close to 5 per cent, with faster growth seen outside London, according to official data.
House prices across the country increased 4.7 per cent in the year to May, hitting an average of £220,713, the Office for National Statistics (ONS) said. The annual rate fell from 5.3 per cent in April. Between April and May, prices were up 0.5 per cent.
House values rose in all regions, with the east of England still growing at the highest annual rate, of 7.5 per cent, followed by the east Midlands at 7.2 per cent.
Analysts at Jefferies said that despite the election and consistent doom-mongering, a house prices continue increase was noted.
The north-east registered the slowest annual growth, of 1.6 per cent, followed by London at 3 per cent. Prices in the capital are still more than twice as high as the UK average, at £481,345.
The most expensive borough to live in was Kensington and Chelsea, in west London, where the average property cost £1.5m. In Burnley, Lancashire, the average house cost £78,000.
It is clear that prime London may as well be a different country. It was also added that buyers in Kensington and Chelsea would need a deposit of £450,000, based on a mortgage at 70 per cent loan to value.
For a one-salary household, gross income would have to be £222,000. The number of people in the UK earning more than £200,000 is estimated to be £ 35,000 or 0.7 per cent. When such a small proportion of the population can afford to live in a borough, demand must be coming from other quarters, namely foreign buyers.
The ONS uses data from the Land Registry. Its annual house price growth has slowed since mid-2016 but remains faster than the 2-3 per cent growth reported by major mortgage lenders Halifax and Nationwide in recent months. Analysts believe that a fresh slowdown is under way.
Samuel Tombs of consultancy Pantheon Macroeconomics is predicting that annual price growth will slow to 1.5 per cent by the end of the year.
He argued that lenders are reporting that they will lend less in the third quarter and the recent pickup in wholesale funding costs suggests that they will not continue to cut mortgage rates. Meanwhile, the recent deterioration in consumer confidence, largely in response to the intensifying squeeze on real incomes, has made households less willing to make big ticket purchases.
Belper in Derbyshire, Hove in East Sussex, Todmorden in West Yorkshire, Woodbridge and Sudbury in Suffolk are the towns that have seen the fastest house price growth since January, between 6.6% and 7.4%, according to Zoopla. Bexley and Swanley in Kent, Langport in Somerset, Worcester Park in south-west London and Holyhead in Anglesey round out the top 10 property hotspots, with price growth of more than 6 per cent.
However, values vary widely among the hotspots, from £152,840 in Todmorden to £492,850 in Worcester Park.
Richmond in North Yorkshire, Leatherhead and Walton-On-Thames in Surrey, and Altrincham in Manchester were identified as coldspots, with the biggest percentage falls in values – at around 5 per cent. Pwllheli in Gwynedd, Weybridge in Surrey, Southwell in Nottinghamshire, Ellesmere Port in Cheshire, Burnley and Pontefract in West Yorkshire have also seen prices fall since January, by more than 4 per cent.
The housing market is still simmering away nicely. Even though the overall growth rate has fallen, for first time buyers the slower rate of house price growth will be welcome, particularly with inflation running ahead of wages for many.
Experts think that the government needs to change the rules of the game by introducing a fresh, new way of building homes that brings down the colossal cost of land and gives more powers to communities to deliver the genuinely affordable, high-quality homes that ordinary families are crying out for.