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London property increases continue

Figures from the Land Registry show that London’s average house price for May 2007 stands at £335,658 whereas the average price for England and Wales is £180,594. This is an annual increase of 8.9 per cent and up 0.7 per cent on April’s figures when the average price was £179,935.

The current rate of increase for London house prices remains over 6 per cent per annum, greater than that of England and Wales. This is the largest variation in two years, when London lagged behind the rest of the country by approximately 6 per cent.

This comes after the report last week that more than half of London’s multi-million-pound houses are bought by non-doms (non-domiciled). Commentators say that this boom in house prices in the capital fuelled by foreign money is having a rippling effect down the market, making it harder for first-time buyers to get on the property ladder. A report by Property Vision released today says that over 35% of Londoners were born outside the UK and that percentage is heading towards an estimated 50% over the next decade, which begs the question of where they are going to live.

Outside of the capital, the market is painting a different picture. Nationwide say that overall house prices are increasing at a rate of £50 a day, twice as fast as this time last year. Despite this, they believe the underlying trend in house price growth is finally softening. Approvals for purchases fell in April and estate agents are continuing to show a fall in the number of new buyer enquiries.

The Royal Institute of British Architects agrees with Nationwide’s summary of the state of the market. ‘Prices continue to rise but the housing market is cooling as interest rate hikes start to take effect. Those seeking to enter the housing market will continue to find the property ladder difficult to access and with rates certain to rise further those with variable rate mortgages will have to tighten their belts in the coming months.’

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