Further price leaps
Average residential values grew by 0.4 per cent over October and are now 4.9 per cent higher than a year ago according to the latest monthly housing market survey by Hometrack, the housing information business. This is the fastest year on year rate of growth for over two years.
London and the south-east have seen house price inflation of more than four per cent this year, whilst Yorkshire and Humberside, the East Midlands and the North have recorded price rises of only one per cent or less.
‘The strong growth in house prices across London and the South East continues to put a major gloss on the apparent strength of the national housing market’ comments Richard Donnell Hometrack’s director of research. ‘Our latest survey shows that average prices rose across just a quarter of the country. The reality for many home owners is that house price growth across large swathes of the country has been extremely modest over the last 12 months.’
The growth in London house prices continues to be driven by a lack of housing for sale and robust levels of demand. However, after what has been a year long bounce-back for the London market there are now growing signs of resistance to higher prices with the average time taken to sell property unchanged over the last three months (3.6 weeks) and price rises slowing for the fourth month in a row.
The number of properties coming onto the market in London has risen for the first time in five months as buyers look to take advantage of the current strength of the market. Whether sellers’ expectations on achievable prices are realistic remains to be seen. ‘A flood of potentially over-priced properties coming to the market would certainly put an end to the recent level of price rises,’ says Donnell.
The Russians are coming
A significant factor impacting on the UK property market is the growing importance of foreign money. Particularly notable is the increase in Russian, European and Middle Eastern buyers in Surrey and Berkshire. Figures recently released by Knight Frank Residential Research show that from the start of the year to June there has been a 38.2 per cent rise in enquiries from overseas purchasers looking to buy a country house in the UK.
North Surrey and Berkshire have traditionally attracted interest from international purchasers, but recent data suggests that this is now at an all time high and 63 per cent of prime property above £3 million is bought by foreign nationals, of whom a large proportion are Russian.
Antony Wardell, Partner in charge of the Knight Frank Home Counties offices, said: ‘Knight Frank has offices in Moscow and St Petersburg and a Russian desk in London. The favourite property type for Russian buyers is brand new, very high specification country houses in generous plots and the best locations. Many are sensitive to environmental noise, especially busy roads. Houses should have high ceilings and large windows. Staff accommodation is essential and good sports complexes with an indoor pool and gym are also much in demand.’
Security is also high on the agenda for buyers from abroad and the Russians, in particular, like to have fast access to central London and the airports, especially Farnborough and Luton for private jets.
The second three months of 2006 saw the boom in the UK’s prime country house market continue and on the back of an exceptional year in the central London, London buyers are taking money out of the capital and choosing to invest it in the country. Prices for all prime country house property (average price £1.73 million) rose 3.9 per cent in the second quarter, representing an annual growth of 8.9 per cent, the fastest growth rate recorded since early 2004. The same data source reveals that average prices for properties priced at under £1 million in the Thames Valley have risen 6.5 per cent to June.
Statistics also show that the average age of Knight Frank’s £3 million-plus purchasers, from home and abroad, is reducing, though the majority are above 50 years.