The latest house price figures offered further evidence that the property market is heading for a crash – but not everyone is suffering to the same extent.
The Land Registry said house prices in England and Wales fell by 2 per cent to an average £178,364 over the 12 months to July, the first time the government agency has recorded an annual fall in the market since its monthly surveys began seven years ago.
However, Knight Frank identified at least one sector of the market that is continuing to prosper. Though the upmarket estate agent said it was observing a weaker market in London, it also noted the "super prime" sector was holding up far better.
Residential properties valued at £10m or more increased in value, by 2.9 per cent in August alone. That took the annual rate of house price inflation for the superrich to 19 per cent. Knight Frank said buyers, many of them from countries rich in natural resources, appeared to have done well from the commodities boom with huge rises in the value of oil, gas and metals boosting their purchasing power.
The estate agent's report also supports other anecdotal evidence that the non-dom community may be staying put in London despite the Government's new levy on them.
Liam Bailey, head of residential research at Knight Frank, said: "Well-located properties are still attracting competitive bids which may explain why Mayfair, which contains a number of 'trophy' properties, is outperforming other neighbourhoods such as Chelsea".
Nevertheless, the Land Registry figures for the rest of the market offered little comfort. The agency also revised down its calculations on price movements in June, from a 0.1 per cent average rise to a drop of 0.6 per cent, the sixth consecutive monthly decrease.
Though they differ in the size of the falls they record, all major indices on the state of the market are pointing firmly downwards. This week, Nationwide recorded a 10 per cent fall over the year, with a 1.9 per cent drop in August. The discrepancy between the much larger drops announced by the Nationwide and Halifax indices, compared with official data, can partly be explained by the time lag associated with the registry's data, which cover completions and run about three months behind the lenders' numbers. The registry data also covers properties without a mortgage.
The East Midlands had the biggest yearly drop, down 5.1 per cent, followed by Wales where prices were 4.4 per cent lower. Detached houses appeared to be faring worst, with prices dropping 2.3 per cent. The figures also showed that the number of homes changing hands had fallen sharply in the past year, with transaction volumes for May – the most up-to-date figure available – 43 per cent lower than 12 months earlier at 61,038.
All regions, except London, had prices fall in July on an annual basis. London prices rose 1.7 per cent, thanks to bigger hikes in more affluent boroughs, including those recorded by Knight Frank. However in the capital as a whole, prices fell, especially for non-premium (under £1m) property.Reuse content