House prices nearing 2007 peak, says new report

The South West and North West saw the biggest monthly price drop

The average house price in England and Wales is now £177,824, according to figures from Land Registry out today. The November 2007 peak was £181,383.

Its latest report suggests house prices in August were up one per cent compared to July and 8.4 per cent to the same period last year, although property indices vary in estimating growth and average house prices.

"Another surge in house prices means even more young people and families left watching their dreams of a stable home own slip further out of reach," said Campbell Robb, Shelter’s chief executive. "People across the country anxious to put down roots are instead finding themselves stuck in the 'rent trap', moving from one expensive and unstable rental property to the next, with little hope of saving enough for a home of their own. Politicians need to start meeting people halfway by taking real action to build the affordable homes we desperately need."

As in previous months, London saw the largest monthly increase at 2.7 per cent, while the South West and North West saw the biggest monthly price drop (0.1 per cent). The number of properties sold in England and Wales for more than £1 million in June jumped 34 per cent to 1,135 from 848 in June 2013.

Richard Sexton, director of e.surv chartered surveyors, said that London was 'acting like the packhorse' for the property market, pulling up prices across the rest of the UK.

"The capital is a different species to the rest of Britain. Many other regions have only just found their legs, and are still moving very slowly," he said. "London’s market has already broken free from the rest of the field, with prices thundering forward at twice the pace of the rest of the country. Anything that can help improve affordability in the priciest areas must be considered."

James Hall, director of London estate agent Fishneedwater agreed, saying that the London market had moved 'from wobble to warp drive'.

"Any fears of cooling have been forgotten as price inflation continues to crank up to breathtaking heights," he said. "Supply is strong as sellers decide that now is the time to cash in, and, despite tougher lending conditions, demand is still shows no signs of dwindling. Elsewhere in the country, there is a greater sense of sanity, with steady rates of growth now spreading even to the areas worst affected by the crash.

The Land Registry's latest figures show that in June the number of completed house sales in England and Wales increased by 11 per cent to 73,158 compared to June 2013.

Brian Murphy, Head of Lending at Mortgage Advice Bureau said: "The housing market is now well accustomed to news of rising property prices, with a steady recovery from post-credit crunch lows being made over the past year. However, a considerable annual increase in property transactions combined with a sustained trend of falling repossessions suggests consumers are coping well with this change as the wider economy improves."

Mark Harris, chief executive of mortgage broker SPF Private Clients, added that with Mark Carney warning earlier this week that the first interest rate rise is getting closer, borrowers should not be complacent.

"While the Governor of the Bank of England pledged that increases would be 'limited and gradual' borrowers must still plan ahead and ensure they can afford their mortgage now and in the future," he said. "Five-year fixed rates in particular are good value and provide certainty for the medium-term."