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House prices surge ahead
Jonathan Prynn, Evening Standard4 Oct 2007
Average house prices in London have risen above £300,000 for the first time.
The market appears to have shrugged off last month's Northern Rock debacle and is set to rise for the rest of the year, according to two of the most respected surveys of prices published today.
The figures are good news for Labour in London - a key election battleground - if Gordon Brown decides to call a snap poll.
There had been fears that last month's credit crunch would feed straight through to consumer spending and house prices.
But so far the High Street and property market have proved more resilient than many commentators expected.
Today's figures from the Nationwide Building Society and Halifax show that prices in the capital rose rapidly during the summer. The Nationwide said they climbed 3.4 per cent between June and last month, the same pace as in the spring quarter, while the Halifax said they were up by 2.3 per cent.
Nationwide said the annual rate would be 16.5 per cent while the Halifax's figures put it at 18.3 per cent.
The figures are at odds with some other surveys which suggest a small downturn in August, although this could have been linked to the introduction of Home Information Packs.
The average price of a home in London went up from £260,644 to £302,486, according to the Nationwide. For first-time buyers it rose to more than £260,000, beyond the Conservative Party's proposed new stamp duty threshold of £250,000.
It was the ninth consecutive quarter that price increases in London outstripped the rest of the country, further widening the gap between the capital and all the regions.
The Nationwide said the extraordinary strength of the London economy, fuelled by the City, meant that prices would continue to outstrip the rest of the country.
Growth this year as a whole is forecast to be around 14 per cent. However, the building society said the "froth" would be blown off the market by smaller bonus payouts and possible job losses in the City at the end of the year.
Nationwide chief economist Fionnuala Earley said: "Insufficient supply of homes is unlikely to go away quickly and with employment required for the Olympic development there will continue to be some supporting factors in the London market."
The Nationwide figures show that home prices are going up fastest in Islington with a 31 per cent annual rise to £470,077. Next come Camden and Haringey on 26 per cent, and Hammersmith and Fulham on 24 per cent.
Martin Ellis, chief economist at the Halifax, said: "A strong economy and healthy labour market will provide a sound underpinning for the housing market over the coming months.
"Gross domestic product increased at an annual rate of 3.1 per cent in 2007 second quarter, comfortably above the long-term average rate of 2.5 per cent. Continuing supply shortages of both new house building and second hand properties for sale will also support house prices."
He added that most people would be able to cope with the increased cost of mortgages. He said: "The overwhelming majority of borrowers coming off fixed rate deals are expected to be able to absorb the increase in payments."
Reader views (12)
The only true figures are thos published by the Land Registry but these are based on sales agreed some three months earlier.
Watch the websites to see that properties are just not selling. Prices are sinking even if the agents are holding asking prices to mask the fact.
- Martin Fielding, London, England, 05/10/2007 11:02
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If you can't afford the prices in London, then you will have to accept living on the outskirts. People in LA understand that they can't live in Beverley Hills. If you want to play...you've got to pay! For every person who insists that 'prices have GOT to drop'...there are many others who have the money and desire to purchase at the going rate.
- Andrew, Phoenix, USA, 05/10/2007 02:15
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People in London can afford houses. That's why they're still going up. It will have to go up a lot further before I won't be able to afford a cheap council flat in a rough area. With people like myself who have invested wisely and have family money from immigrant grandparents (though only a small wage), you have to ask if it really is a bubble.
- Graham Suvinder, London, 04/10/2007 22:31
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Just who are these idiots buying flats at £200k in Croydon? When did I miss out on the £30k pay rise everyone else in London must have had?
- Harry, London, 04/10/2007 21:49
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This cannot be accurate In our part of area of Hendon, houses and particularly flats stopped increasing in price some time ago. Just look at the hundreds of 'for sale' boards!
- Ian Freeman, London, 04/10/2007 21:01
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My view is that Sterling will be seeing inflation at the rate of 30% per year for the next three. This is the only option to there being a recession or even a potential depression. The fact that house prices are rising is an indication of the rise in inflation. This is good news because a recession or possible depression would be a more unpalatable.
- Christopher Miller, Bedford England, 04/10/2007 20:14
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I agree with Gavin's post. People are right. It is different this time. The coming correction will make the last one (1989-1995) look like a tea party.
- Diane, London, 04/10/2007 19:59
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Absolutely ridiculous. Who's buying these houses? Bring on the crash.
- Jon, Near London, 04/10/2007 18:20
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In my view, the main problem with these statistics is that mortgage lenders take their figures from completed sales. Hence the figures reflect deals that were agreed three months earlier. The summer has been strong, but prices are on their way down. If in doubt, look at estate agent's websites. For the first time in my memory there is a lot of property available and not much sold. As an agent, myself, these are worrying times.
- Charles, Fulham, London, 04/10/2007 17:50
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In September I agreed a sale on my flat and had to drop £20k (10%) below the asking price which was the estate agent's valuation. If this sale goes through I guess it will appear in the October or November statistics. What I'm saying is I believe the market has already dropped and we will see it in the coming months figures.
- Peter, London, 04/10/2007 17:10
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The media and government make this out to be some kind of amazing, wonderful thing.
Yet millions can't afford their own houses, communities are being ripped apart, people are taking on ridiculous amounts of debt...all because of greed.
How very Nu Labour.
- Lb, London, 04/10/2007 16:49
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People in London can't afford houses as it is, how can they go up higher. I'm on a good wage with a large deposit yet I can't even afford the cheapest most run down flat on a council estate. Any rise in house prices is based on speculation rather than real value. The London housing market is one big bubble waiting to burst and this credit crunch is the pin.
- Gavin, London, 04/10/2007 15:46
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