Market overview: UK house prices up 5.1% as London property market remains sluggish but steady

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The London housing market remains sluggish but steady despite fears over the Bank of England’s decision in November to raise interest rates.

Homes in the capital sold for an average of £482,000, an increase of 2.4 per cent (£11,000) on the previous year, according to the latest figures from Land Registry and the Office for National Statistics (ONS).

London’s house prices remained the highest in the country but the capital continued to experience the weakest price growth as buyers continue to be held back by affordability constraints.

Sold prices fell for the fourth month in a row, with London’s November prices down 0.9 per cent on October.

“Continuing the recent regional trend, London is the weakest performer. House prices have now declined for four consecutive months, from the high of £490,000 in July to £482,000 in November.

"But due to growth earlier in the year prices are still 2.3 per cent higher than 12 months ago,” said Richard Snook, senior economist, PwC.

HOUSE PRICES ACROSS THE UK

By comparison, the average house price in the UK as a whole was £226,000, up 5.1 per cent year on year, thanks, in part to strong annual growth in less expensive regions.

This increase was led by the West Midlands, where the average sold price was £192,000, which is 7.2 per cent higher than a year before. The East Midlands, average price £185,047, came in second with prices up 6.4 per cent.

The emphasis on less expensive areas supports findings from a separate report from UK Finance, which reported a 15.2 per cent annual rise in the number of new first-time buyer mortgages – typically on less expensive homes in cheaper areas – in November.

The figures also showed rises in lending to home movers and remortgaging, despite the Bank of England’s decision to raise the base rate to 0.5 per cent on November 2, 2017.

“The data shows housing market activity remains buoyant, despite November’s rise in the base rate,” said Paul Smee, Head of Mortgages at UK Finance.

“Steady increases in lending for house purchases together with increases in homeowner remortgages reflect a keenness among consumers to benefit from still historically low interest rates, and a highly competitive marketplace.”