London house prices soar by 17.7% in just one year
London house prices shot up by almost double the value of London salaries over the past year, official figures have showed.
The Office for National Statistics said average prices in the capital soared by 17.7 per cent to £458,000 in the year to February. That £63,000 increase over 12 months compares with average earnings for workers in the capital of just £36,000 a year.
This means many people who own houses in London will have seen their homes “earn” almost twice what they did at work over the past 12 months.
But soaring prices are making life ever more difficult for younger people in London who want to buy homes, as house values rise quicker than their capacity to save for a mortgage down-payment.
“Apart from the lucky few who can rely on the bank of mum and dad, our runaway housing market is forcing a generation to watch a home of their own become an increasingly distant dream, no matter how hard they work or save” save Campbell Robb of Shelter.
Alex Hilton of Generation Rent said the latest figures were also “miserable news” for Britain’s estimated nine million renters, three quarters of whom say they want to buy homes. “Higher prices only means even higher rents as new landlords try to make a return on their increasingly expensive investments” he said.
The Nationwide building society reports that the ratio of first-time-buyer house prices to earnings in London reached a record eight times in the first quarter of 2014. That’s up from 6.7 times a year ago and higher than the previous peak of seven times that was recorded in late 2007.
The jump in London’s prices was the biggest annual increase in seven years, but across the UK house prices also continued to accelerate, rising by 9.7 per cent in the year to February. There were signs of the capital’s boom spreading out across the country too with prices up in every region. Scottish prices were 2.4 per cent higher than a year earlier. In Northern Ireland they were up 2.8 per cent and 5.3 per cent in Wales. The North East of England recorded increases of 2.9 per cent and in the North West prices rose 5.9 per cent. Outside London prices were strongest in the South East, rising by eight per cent.
Many commentators have voiced fears of a potentially dangerous bubble in housing and the regulators at the Bank of England have said they are monitoring the situation closely. The Chancellor George Osborne has also been accused of irresponsibility by stoking demand for housing through his Help to Buy mortgage subsidies, introduced last year. But the government’s housing minister, Kris Hopkins, insisted the housing market was still in line with fundamentals. “Mortgage lending activity in the housing market remains below the historic average and relative to earnings, median house prices across England are around the same level they were in 2005,” he said.
Across the UK the average house price to earnings ratio currently stands at 5.5 per cent. That is below the 6.5 percent ratio recorded at the peak in 2007, but it remains well above the long-term average of 4.2.
In an interview with The Independent earlier this month the Business Secretary Vince Cable said prices were being driven higher by a “chronic imbalance” between housing supply and housing demand. New housing starts in England hit 123,000 in 2013, the highest level in five years. But the annual supply was still estimated to be more than 100,000 below the 250,000 plus levels of construction necessary to meet the demand resulting from new household formation.
- 1 Revolutionary lost Caravaggio painting 'Mary Magdalen in Ecstasy' identified
- 2 McKamey Manor: This 'extreme' haunted house is the stuff of nightmares
- 3 Russell Brand says he will 'probably' give up acting to focus on his revolution
- 4 Watch what happened when food critics were unknowingly served McDonald's
- 5 David Beckham's Haig Club whisky is exactly what’s wrong with the Highlands
Putin accuses US of causing global instability
Eleven members of same family hospitalised after eating deadly pufferfish
FCKH8: YouTube reinstates provocative anti-sexism video showing young girls swearing
Phone-hacking: The Piers Morgan connection - Mirror admits some stories during Morgan's tenure may have been obtained by illegal means
Russell Brand says he will 'probably' give up acting to focus on his revolution
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Tony Blair 'says Ed Miliband will lose 2015 general election'
Putin: The US is to blame for almost all the world's major conflicts
iJobs Money & Business
£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...
£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...