UK house prices rose 9.8% in the year to December 2014, according to the Office for National Statistics.
Annual property price increases were driven by a boom in London of 13.3% and, to a degree, by an increase in the south east of 11.5% and the east of 11.4%.
Overall, prices in London showed the highest growth, demonstrating that a property in the UK capital, particularly in prime areas such as Mayfair, Chelsea and Kensington, is a solid long-term bet.
The data shows that house price inflation was 10.2% in England, 4% in Wales, 5.5% in Scotland and 4.9% in Northern Ireland.
It’s evident that those who already own London property have hit the jackpot when it comes to reaping the rewards of their investments. But there remain pockets of London that offer opportunities for buy-to-let investors. These include Nine Elms, which is currently the biggest regeneration project in London. Battersea is another good bet due to the revamping of the Power Station and the luxury flats that are currently being snapped up by investors both at home and overseas.
However, for first-time buyers the news is not so good. Prices paid were 9.5% higher on average in December 2014 in comparison with a year earlier. Some commentators say the annual increase in London isn’t sustainable, especially because there’s a general election coming up and potentially a mansion tax introduced by the Labour government. As well as this, there’s the prospect of interest rate rises – although recently Bank of England governor Mark Carney dropped the bombshell that a rate cut could be on the cards to ease deflationary pressure.
Recent figures from Rightmove for February also show that the average price of property coming onto the market in the UK actually increased by 2.1% or £5,000, taking the average asking price to £279,004. This dampens assumptions that prices pre-election will stabilise out and see little growth; it’s clear London property is as sought-after as ever. With demand outstripping supply, some agents are reporting their lowest ever stock of quality property for sale with a 4% fall in new seller numbers in comparison to the same period last year.
Housing demand is at a record high with visits to the Rightmove site hitting over 100 million in January for the first time . Apparently, record busiest ever days were set on Sunday 25 and Monday 26 January. There’s also been a 31% increase in housing transactions in the last two years in England and Wales, outpacing the 11% rise in the number of properties coming to the market in the same period.
As well as this, stamp duty changes made in December’s Autumn Statement could mean that there’s more movement around the previous thresholds (property was often put on the market at just below the different thresholds to ensure it sold quickly). So overall, the outlook for property this year is pretty positive, with London property remaining a quality investment option for buyers both in the UK and overseas.
Image credit: Property Division