House prices rocket in January on back of stock shortage

House prices have increased by 2.5% in January according to the latest figures from Land Registry.

While building and planning permissions have all increased recently they are still yet to come close to government targets indicating prices rises due to shortages will continue for some time.

Prices in London in particular have increased hugely, with year on year prices rising almost twice as fast as the rest of the country with prices up 13.9% compared with 7.1% for the country as a whole.

Andy Sommerville, Director of Search Acumen said: “The latest figures are further evidence of a housing supply shortage. While prices continue to increase and properties sold for over a million pounds in England and Wales are on the rise over the year before, the number of property transactions has decreased. Families and retirees are choosing to stay in their homes for longer, holding on to properties that continue to increase in value.

“London in particular is stressed to the limit, with outer boroughs like Hillingdon experiencing a 16% rise in annual prices and neighbouring areas like Reading and Luton becoming commuter favourites, increasing year on year by more than 15%.

“But it’s also buyers around the Northern Powerhouse cities that are feeling the pinch, with Knowsley, close to Liverpool, rising in price by as much as 9%. While it’s all positive for those already on the property ladder, we’re hoping the government is paying close attention to the growing unaffordability of family and first time buyer homes.”

Peter Rollings, CEO of Marsh & Parsons, said: “You can understand why there’s so much optimism in the property market at the moment – even with the speculation over the outcome of the EU referendum. House prices have made quick progress already in 2016, and this will be a pleasant wake-up call for homeowners considering selling in the spring market. First-time buyers and buy-to-let investors are moving at a brisk pace, and while they continue to grossly outnumber properties for sales, house price growth will persist through the wider political uncertainty.

“London is in a whole different league, with property values pushing 14% annual growth. Over the past year, prices have risen across the board in the capital, but the double-digit increases are predominantly concentrated in cheaper boroughs, where buyer demand remains very robust. The Prime Central market is still dragging its heels as a result of the higher-end Stamp Duty, and many will be hoping the upcoming Budget brings a reversal, to energise activity further up the property ladder and free up supply along the chain.”

Andrew Bridges, managing director of Stirling Ackroyd, said: “Property prices are galloping out the stalls. But it’s essentially a one-horse race in the house price stakes – and London is winning by several lengths.

“Optimism and enthusiasm for an area are positive reasons for house price jumps. But as this race progresses, the going is getting tougher for first time buyers and anyone aiming to move towards the economic gravity of London and the South East. London has always been a city of mismatch – between unaffordable and affordable boroughs. But now higher prices are triumphing across a much wider area, and some buyers are left with fewer options – and less value for their money.

“Supply of new homes is the fundamental issue. Hillingdon saw London’s largest price growth – yet our own research shows Hillingdon council approved just 36% of potential new homes in 2015. New homes are the only way to maintain more sustainable price growth – and blinkered planning rules are getting in the way of London’s future.”

Land Registry’s latests figures for recorded sales, for the three months to November 2015 also show a decrease in volumes, with 78,652 sales recorded compared with an average of 81,656 for the preceding three months.

The number of sales for November also dipped compared to a year previously, down 2% from 73,282 to 72,167.

Today's Conveyancer