House price rises in London at odds with falls in rest of the UK, amid predictions that values will continue to falter
Rising house prices in London continued to drive the annual rate of property inflation in June, with the capital recording a 6.5% increase over 12 months, latest official figures show.
Across the UK the annual rate of price growth was 2.3%, unchanged from the 12 months to May, according to the Office for National Statistics (ONS). Over the month, prices rose by 0.5% to an average of £231,000.
However, the headline growth masks falls in much of the UK. Growth of 2.8% in England was offset by declines of 1% in Scotland and 11.9% in Northern Ireland. In Wales, prices were back at their June 2011 level.
According to the ONS index, the average price of a property in London is now £392,000 – more than £100,000 higher than the rest of the south-east and three times the average price in Northern Ireland. The average price paid by first-time buyers was up by 3.1% over the year, at £173,000, while movers paid an average of £266,00 – 2.1% more than in June 2011.
The figures, which are based on mortgage completions data from the Council of Mortgage Lenders, come as research by property website Zoopla suggests sellers and estate agents are still being unrealistic about the prices they can fetch for properties.
Zoopla found 37% of the homes listed on its site had been reduced in price at least once since going on the market, with the average price cut coming in at £19,000.
The biggest discounts were found in Newcastle upon Tyne where sellers have knocked an average of 9.6% (£18,888) off their original asking prices, and in Liverpool where the average reduction is 9.1% (£13,643).
Wakefield tops the list of places with the highest proportion of price-reduced properties on the market (51%), followed by Rotherham (45.6%) and Barnsley (44.7%).
Nigel Lewis of Zoopla said activity had been knocked by the weather and the extended jubilee bank holiday. “Once the distractions of summer holidays and the Olympics are gone, buyers will once again be able to focus attention on their property search and this should bolster confidence among sellers,” he said.
However, Howard Archer, chief UK economist at IHS Global Insight, said he believed prices were still set to fall further. Archer pointed out that the ONS figures lagged those of Nationwide and Halifax, which are based on prices at the point a property is valued, rather than on completion, and both showed falls in July.
“Housing market activity is persistently low compared with long-term norms, and while it may eventually be lifted by more mortgages being granted at decent interest rates under the Funding for Lending scheme launched by the Bank of England, this is unlikely to be a major factor in the near term at least,” he said.