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Categorized | Property

Two-speed UK housing market returns

Posted on August 28, 2015

LONDON, ENGLAND - JANUARY 23: Houses are seen on January 23, 2015 in an affluent area of west London, England. The Labour Party has proposed a Mansion Tax under which properties over a market value of 2 million GBP would be subject to a levy. (Photo by Carl Court/Getty Images)©Getty

A two-speed housing market in the UK is re-emerging, with prices in London, south-east and east England rising at close to double the rate of the country as a whole.

Official Land Registry data for July show overall prices in England and Wales were 4.6 per cent higher than last year. But this headline figure, which sits right in the middle of the range of private sector indices, conceals substantial regional variations.

    Prices in the east were up 8.9 per cent on the year, followed by London at 8.3 per cent and the south-east at 8.2 per cent.

    Prices in the capital are about 40 per cent above their pre-crisis peak, with the cost of an average property at £488,782, according to the Land Registry.

    Elsewhere price increases remain muted. In the north-east, prices rose just 0.4 per cent year on year, and 1.4 per cent in the north-west. Average prices in the north-east are the lowest in the country, at £100,670.

    There were also further signs price acceleration was being driven by a property shortage. The number of transactions in May — the latest month for which the Land Registry has transaction figures — continued to slide, down 15.3 per cent year on year.

    Transactions at the top end of the London market have been hit hard by the increase in stamp duty, but prices have been increasing in previously less fashionable areas.

    Andrew Bridges, managing director of estate agent Stirling Ackroyd, said it was important to remember that London was a microcosm of the whole country, with its own hotspots, adding that the strongest demand was in the east of the capital.

    “Here London’s start-up hubs are driving local industry to global heights. And this is reflected in an eastward shift in property prices. Hackney, for example, has seen annual house price growth five times faster than Kensington and Chelsea,” he said.

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