Property prices in Prime Central London have increased by 11.29% year-on-year to stand at £1,638,456 in Q2 2014, analysis of Land Registry data by London Central Portfolio has revealed.
London property transactions stood at their highest level since 2007 with 6,546 recorded sales over the last year, 19.34% more than the year before.
London Central Portfolio concluded that the price rises in London are sustainable, as the increase is not far from the long-term annual average of 10.5% since January 1996. As such, they do not agree with the so-called “bubble” in London.
Across the whole of England and Wales prices increased by 5.9% to £256,883 in Q2 year-on-year. Strikingly sales rose by 30.93% compared to Q2 2013 to hit 848,767 – the highest figure since 2007.
Naomi Heaton, chief executive officer of London Central Portfolio, said: “With the introduction of mortgage caps and the prospect of interest rises on the horizon, this increased activity may well subside.
“It is a fact that the housing market tends to be self-regulating, highly sensitive to the state of the economy, employment and mortgage rates. Direct outside intervention to moderate growth is therefore uncalled for and the consequences may well not be predictable.
“Government actions however, such as the introduction of mortgage caps are valuable, not in cooling down the market but in ensuring that borrowing levels remain prudent and future proof.”
The whole of Greater London saw stronger growth than Prime Central London, as prices increased by 12.09% to £533,489 yearly to Q2 2014.
Heaton called for the government to increase the Stamp Duty threshold to stop the rate jumping from 1% to 3% in the £250,000 bracket, as the average property price in the whole of England and Wales now stands at £256,883.
She added: “This would crucially help open up the market to first time buyers, for whom finding an additional £5,000 of stamp duty may make it impossible to save up for their deposit, at a time when mortgage levels are being capped on lower multiples of salary than before.”
Roshan Doostdar, Director at Vision Finance, said “The property market outside of London is bouyant and prices are rising steadily, with no reported signs of a bubble. This provides an optimal backdrop for property developers as there is increased certainty around the prices which could be achieved once the development has finished and the units are being marketed. As such, lenders are increasingly looking outside of London to fund developers who are able to source profitable opportunities, and property development finance is very much available outside of the M25.”
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