19 Jun

House prices continue to rise

House prices continue to rise

Prices in England and Wales rose by 0.9 per cent over the past month, according to the latest index.

Figures from the LSL/Acadata index show that property prices in May rose for the 11th consecutive month but growth could be showing signs of slowing down.

David Newnes, director of Reed Rains and Your Move, explained that once London increases had been removed from the data, average prices in the rest of the country had risen by only 6.3 per cent in the last 12 months.

He added: "As the vigorous health of the UK housing market catches international and media attention, all eyes have been on how the government and regulators will react. However, the growing clamour for intervention neglects the fact that when taking inflation into account, only London and the South East have seen house price growth in real terms since January 2005."

It has been suggested that the growth in house sales during May could have been undermined by the introduction of the Mortgage Market Review (MMR) rules, especially as the process of obtaining a home loan was lengthened as a result.

However, there are signs that the recent economic recovery could help to boost confidence across the UK and this may lead to strong house prices in areas outside of the capital.

In particular, the Help to Buy scheme is driving up demand in some regions and this could have a significant impact on the overall housing market prospects.

Data also shows there has been a rise in demand for prime country homes across the UK over the past 12 months.

According to the latest analysis from Knight Frank, such sales have increased by 35 per cent since March 2013 and the number of potential buyers rose by 13 per cent.

Outperforming initial predictions, areas outside the capital are in demand and there has been strong growth in commuter locations such as Cobham, Henley, Berkhamsted, Beaconsfield and Oxford.

However, the increased interest in country property has also proved beneficial for demand for properties in traditional urban locations outside of London.

"There are several reasons why the urban homes market is in strong demand. Those with young families moving out of London want to take advantage of the significant price differential between London and the rest of the UK, whilst at the same time live in an urban area where their children can go to first rate schools within walking distance," said Rupert Sweeting, Knight Frank Country.

Figures also showed that across England and Wales, excluding London, annual sales of properties valued at £500,000 and more increased by 35 per cent, a 40 per cent rise for those valued between £1 million and £2 million, a 35 per cent rise between £500,000 and £1 million while there was a 22 per cent rise in the sale of homes over £2 million.

Knight Frank is expected demand for prime property to continue over the coming months but has raised concerns that the forthcoming election and a potential increase in property taxes could have an impact on activity.ADNFCR-1222-ID-801729354-ADNFCR

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