The average house price in London went up over £6,000 in July, but experts say sales were made before the cost-of-living squeeze. The average price of a home in London has risen 9.2% in the year leading up to July—a significant increase but still below the rate of inflation.
In July, the Land Registry reported that property prices in London hit a new high of £543,517. Because of this increase, the average value of a home in the capital has increased by more than £45,000 in a year and by more than £6,000 in just one month. In all of London, prices went up the most in Harrow, which went up by 14% to an average of £546,597.
The cost of house prices has been on the rise, with a 15.5% jump in the year leading up to July. This was the most considerable increase since 2003. Prices dropped after the end of the stamp duty holiday at the same time last year, which explains the jump. London’s jump in annual growth was due to high demand and a continuing lack of supply. However, July data shows transactions agreed upon in April, before rising inflation and the cost of the living crisis started to put pressure on households.
Rising living costs are starting to affect the property market. Nationwide’s house price index shows that in August, house price growth in the UK slowed slightly. Rightmove found that the average asking price in London dropped by £23,000 for the first time this year, though prices in the UK remain high—on average, 10% higher than they were two years ago and £50,000 above what they were in August 2010.
Jeremy Leaf, an estate agent in north London, said that even though the numbers were good, it was too soon for the Land Registry data to show how things have changed on the ground in the last few months. He also said, “The balance of power is shifting more toward the buyer, but these numbers show that there is still a lot of strength underneath, which will make it less likely that prices will drop a lot.” There has been a slight softening, likely to continue over the next few months.
Gareth Lewis, the commercial director of property lender MT Finance, said that the price growth was “unsustainable” because it affected how much buyers could pay for a mortgage and how much they could afford. “House prices tend to go up when there is much demand and not enough homes on the market. These numbers show that.
“What we’re seeing now are the effects of rising interest rates and the cost of living that haven’t yet been taken into account in the flow of transactions. Purchases made in July would have been agreed upon in April when most people had no idea what was coming.
Tom Bill, Head of UK Residential Research at Knight Frank, said, “The big jump in house prices in July tells us more about how a stamp duty holiday can change the course of the housing market than where prices are going next.
“The new government’s energy support package and record low unemployment will help the housing market, but rising mortgage rates will eventually slow the double-digit price growth of the last two years. We don’t think prices will go down, in any case.
“The government is in the process of getting ready for an election, and more tax cuts will help the housing market in the short term.”
