House prices: London now 'far ahead of the curve'

Average first-time buyer deposit has fallen 10 per cent since last year

Latest figures from the Land Registry show that May house prices in London were 18.5 per cent higher than May 2013, compared to 0.9 per cent in the North East while prices fell month on month in Yorkshire & The Humber region by 0.9 per cent.

Overall, May house prices rose 0.4 per cent compared to last month and were up 6.7 per cent over the same time last year, making the average house price in England and Wales £172,035 (the November 2007 peak was £181,518)

"The London market powers onwards  with double-digit growth," said Nicholas Ayre, managing director of buying agency Home Fusion. "But agents suggest that sentiment is changing as buyers are taking more time to consider a purchase before taking the plunge.

"Mark Carney has made it clear that interest rates will go up sooner rather than later so buyers are rightly asking whether they can they afford the property now and also in a year's time when rates could be higher. Even a 0.25 percentage point rise will make a difference."

The official figures come as a report by LSL Property Services shows that first-time buyer deposits have fallen by 10 per cent in the last year to £24,637 in May 2014, with first-timers in London paying £65,989.

Brian Murphy, Head of Lending at Mortgage Advice Bureau said London house prices were 'far ahead of the curve'.

"No other region across England and Wales is even approaching double-digit growth," he said. "Prices appear stable across much of the Midlands and the North which will give renewed hope to first time buyers that buying property is still a realistic ambition. Many of the sales using Help to Buy equity loans and mortgage guarantees have been focused in these regions, allowing better access to mortgage finance without pushing house prices further out of reach.

"London remains a unique case in need of special measures and Londoners will be the first to see the effect of moves by the Bank of England to ration high loan to income mortgages."

The Land Registry report also shows that during March 2014 the number of completed house sales in England and Wales increased by 16 per cent to 63,587 compared with 54,708 in March 2013.

Also, the number of properties sold for over £1 million in March 2014 increased by 28 per cent to 840 from 657 in March 2013.

Campbell Robb, Shelter’s chief executive, said: "Yet another rise in house prices means that even more people across the country will watch their dream of owning a home slip out of reach, however hard they work or save.

"Our research shows that an alarming 80% of homes for sale in England are unaffordable for first-time buyers on average incomes. This means that millions are being left with no choice but to remain in their childhood bedrooms or bring up children in unstable and expensive rented homes."

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