Assetz® News - London fuelling renewed house price surge

London fuelling renewed house price surge

19th June 2006 |

The UK property market enjoyed yet another strong month in June, casting aside gloomy predictions of a sudden slowdown.

The latest property value index from Rightmove shows that house prices actually increased by 0.8 per cent last month, pushing the annual rate of growth to its highest level in more than a year.

Property buyers in England and Wales are now paying an average of £211,442 for houses, which is up from £209,829 a month ago. The annual rate of price growth in the period, meanwhile, climbed from 5.9 per cent to 6.4 per cent, which was the fastest rate of annual inflation since March 2005.

There are, however, huge variations at the moment and the north-south divide appears to be opening once again having narrowed steadily for around four years.

Indeed, the average rate of growth over the past year has been an incredibly 9.4 per cent in the south of England, which compares to just 2.7 per cent in the north. For those looking to maximise the potential of their property investment portfolios, it is a trend that may influence their buying decisions, although there are still some areas in the north that are experiencing strong house price increases.

Miles Shipside, commercial director of Rightmove, comments: "The buoyancy of the southern economy and demand for quality property by affluent buyers are having the effect of increasing homeowners' net worth even further.

"With hindsight, the best time to move from the north to the south and 'bridge the gap' was in September last year, when the difference was at a four year low of 46 per cent. Parts of the north are now being left behind, as stretched affordability has limited sellers' ability to increase prices in most regions," he added.

The average house price in the north of England currently stands at £150,495, which actually represents a fall of 1.8 per cent from May.

House prices also fell in the East Midlands, the West Midlands and in Wales during the month, by 0.2 per cent, 0.7 per cent and 0.4 per cent respectively.

In the middle of a mini-boom, it is no surprise that Greater London has been leading the way in terms of recent house price increases and the annual change in the capital is an impressive 11.7 per cent.

On a monthly basis, however, East Anglia leads the way, with house prices rising by 3.7 per cent in June to an average of just over £207,000. On the other hand, this is still a long way behind Greater London where the average property now costs £315,224.

Property investors are increasingly looking to expand their portfolios with a variety of property types and the new figures from Rightmove are interesting in this respect too. Since June 2005, the price of the average semi-detached property has increased by 5.4 per cent, according to the research.

This compares to an increase of 6.4 per cent for detached properties and 6.8 per cent for terraced properties, but flats and apartments are continuing to impress with the average value rising by 8.4 per cent during the course of the last year.