London Leads U.K. Home Prices to Record as Sales Rise
London’s property boom drove U.K. house prices to a new record in July as transactions reached the highest in four years amid improving confidence, Acadametrics Ltd. said.
British home values increased 0.3 percent from June to an average of 232,969 pounds ($362,300), the London-based real-estate researcher and LSL Property Services Plc said in a report today. While prices climbed 2.6 percent from a year earlier, the increase was 1 percent if London is excluded from the index.
The report chimes with a range of gauges showing gains in property values stoked by international demand for homes in the capital, loosening mortgage availability and Treasury measures to aid the real-estate market. It also underlines the contrast between London’s buoyancy and a more subdued picture elsewhere.
“Domestic and foreign buyers’ interest for bricks and mortar in London appears to be undiminished,” said David Brown, LSL’s commercial director. “Without a sudden rush of properties hitting the market, prices will rise even more over coming months. The bottom line is that the divide between London and the rest of the U.K. housing market is deepening.”
Acadametrics estimates that completed housing transactions reached 68,000 in July after a “gradual increase” this year compared with 2012. That’s the highest monthly total since 2009 and the most for a July since 2007, when the financial crisis struck.
“The main factor has been the easing of credit conditions, enabling more potential purchasers to obtain a mortgage,” said Peter Williams, chairman of Acadametrics. “The mortgage lenders have been assisted by the Bank of England’s Funding for Lending Scheme, which has resulted in more competitive products being offered in the market place.”
He cautioned that, however buoyant overall U.K. house prices may appear, first-time buyer transactions approaching 250,000 per year remain below their long-run average of 500,000.
Williams and Brown emphasized that the London property market, fueled by foreign buyers, is distorting the overall picture of Britain’s house prices. Other reports including one this week by Halifax (UKHBSAMM), the mortgage unit of Lloyds Banking Group Plc, also showed values increased in July.
There are “parts of London operating at an entirely different level from the rest of country, and even from the rest of the capital,” Brown said.
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