English house prices reach their highest ever level
But it's still not a property bubble say experts
Alex Johnson has been part of The Independent's online team since 2007. He has been writing about microarchitecture on his internationally-acclaimed Shedworking blog since 2006 and is the author of Shedworking: The Alternative Workplace Revolution. His latest book is Bookshelf, published by Thames & Hudson.
Tuesday 17 September 2013
Latest figures from the Office for National Statistics (ONS) suggest that house prices in England are now at a record high.
While the ONS house price index for the UK is stilll slightly below the previous high of January 2008, the figures for England by itself are now 0.9 per cent higher than that peak.
One problem with the figures is that the rises in London and the South East are not reflected in all regions. So although prices in London rose by 9.7 per cent over the last 12 months according to the ONS, if the London and the South East (with a rise of 2.6 per cent) are left out, prices in the other regions of the UK only rose by 0.8 per cent. Indeed there were falls of 2 per cent in Scotland and 0.7 per cent in Wales over the same period.
Nicholas Ayre, Managing Director of homebuying agency Home Fusion said: "Are we about to see a house price bubble? This really isn’t about the panic buying witnessed in 2007, it is about growing, steady demand. First time buyers are now increasingly active, some now finding they can access the finance needed to get onto the property ladder and at more reasonable rates."
Peter Rollings, CEO at Marsh & Parsons, said: “Any talk of a housing bubble is wide of the mark. Prices in most parts of the country are still well below the market highs of 2007, and the recovery in many parts of the UK is relatively muted. Ultimately, house prices can only increase at a rate that people can afford – so while wages remain low, and lending continues to be checked, there is a limit to how high house prices can rise."
Andy Knee, Chief Executive of LMS, added: "The Bank of England is set to discuss the possible formation of a ‘bubble’ in the housing market at its Financial Policy Committee meeting tomorrow, exploring what action should be taken to prevent fall-out from a ‘burst’. However, such vast regional discrepancies reaffirm the fact that the existence of the bubble is still in question.
"Due to the nature of the housing market you will always be taking a risk to a degree, so if you are able to source that all important deposit and have found the perfect property then make the purchase. No one can predict if, or when, this bubble will burst, and you don’t want to wait around only to find you have missed your chance.”
"If the government wants to make housing more affordable – and avoid inflating another property bubble – then it needs to encourage more house building," said Richard Sexton, director of e.surv chartered surveyors. "There is a woeful shortfall in housing starts which is causing demand to gallop away from supply and drag house prices along with it. We need a sustainable market which is accessible to everyone, not just the equity-rich. A focus on the underperforming regions outside of London also may need to be considered if large parts of the country are not to be left behind."
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