Stephen Wilson, Managing Director of Stirling Ackroyd says that “In London, we’re now seeing a tale of two cities”, after seeing the latest UK House Price Index which was released yesterday.
“House prices in London are beginning to cool as we head into winter, with Stamp Duty continuing to freeze up the top end of the market while those lower down the chain are feeling the chill from our frosty relationship with Europe.
“The Capital’s house values have slowed to the pace of the rest of England, as demand for homes in commuter towns in the East and South East are pushing up property prices in these regions.
“In London, we’re now seeing a tale of two cities. Prime Central London is witnessing a decline in values as the punishing top rate of Stamp Duty is halting demand for homes in areas like Fulham and Chelsea. This has caused the Capital’s average house price to fall month-on-month.
“However, in zone two and the outer boroughs, house price growth is holding as buyers prioritise value for money. The spur in new developments and infrastructure in Tower Hamlets have given the borough double-digit house price growth year-on-year.
“It’s encouraging that a lot of demand for homes in London is coming from first-time buyers, aided by the Governments’ Help to Buy programme. With low borrowing costs, many aspirational homes owners are now sizing the opportunity to get their first foot on the ladder.
“Yet, there may be storm clouds on the horizon as demand from buy-to-let investors is falling due to the stamp duty surcharge, the end of tax relief on mortgages and tightened rules on buy to let lending. This may lead to higher rents in the New Year as demand for rental properties continues to grow while supply stagnates. It’s also noticeable that in boroughs where the average property price falls into the second highest Stamp Duty bracket, values are falling.
“First-time buyers are also being held back by stamp duty, which is a huge burden on top...
of saving for a deposit. This is a clear failure of the policy as it hinders the help the Government provides through Help to Buy. Hopefully, the Government will consider reforming the policy in their new White Paper.”
Main points from the latest ONS UK House Price Index – October 2016
- Average house prices in the UK have increased by 6.9% in the year to October 2016 (down from 7.0% in the year to September 2016)
- Annual price change of a property in England was 7.4%
- On a regional basis, London continues to be the region with the highest average house price at £474,000
- The East of England is the region which showed the highest annual growth, with prices increasing by 12.3% in the year to October 2016
- Growth in the South East was second highest at 9.1%, followed by London at 7.7%.
- In London, house prices have fallen 1.2% from last month, but are up 7.7% annually
- Tower Hamlets has seen 14.4% growth year-on-year
- Kensington And Chelsea has seen a 4.9% decline annually
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— LandlordZONE (@LandlordZONE) December 14, 2016