The average asking price for residential property in London soared by more than £50,000 in a single month, pointing to the exorbitant growth rate that the capital’s house market is currently experiencing, data from property-website operator Rightmove shows.
In October, house prices in London jumped 10.2% compared to September, or by £50,484 to an average of £544,232, with Rightmove describing this jump as “unsustainable.” The surge comes after two consecutive monthly declines in home values of 2.8% and 1.5% in September and August, respectively.
The average increase across England and Wales was far more modest, at 2.8% to £252,418 after a drop of 1.5% the previous month. Year-on-year, house prices increased by 3.8%.
But let’s keep in mind that that this is a reflection of sellers’ price expectation rather than values that are actually being achieved. There’s a BIG difference.
The whopping growth in London asking prices is partly a result of buyers’ return to the market after the summer lull and also reflects the “long-standing imbalance” between the rising demand and small supply of property, Rightmove commented. Meanwhile, demand for property is thriving, driven by the government’s fresh Help to Buy Scheme, which allows buyers to purchase a home with a 5% deposit. The programme was launched at a time when interest rate hikes are highly unlikely. This comes as a result of the Bank of England’s decision not to lift its benchmark interest rate from a historic low of 0.5% until the jobless rate drops to 7% from 7.7% at present, Bloomberg said.
Earlier this month, data from housing market expert Acadametrics showed that in the first nine months of 2013 home sale volumes in England and Wales increased by 12% on the year. The growth was primarily driven by transactions carried out by first-time buyers, it said.
What are your experiences of the recent property boom? Do you think that sellers are becoming far too optimistic due to recent media hype?