House prices: London property market ‘revival’ sees prices jump £28,000 in a single month
Martin Roberts discusses the rise in house prices
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The latest UK House Price Index shows that the average property price increased by 10.6 percent in the year to August 2021, up from 8.5 percent in July 2021. Although Britons were leaving the capital in the midst of the pandemic, the market has seen a “revival” with house prices increasing substantially.
Last year, many Londoners escaped the city due to the pandemic forcing people to work from home.
This also caused the property market to decline, with rent rates at their lowest since 2016.
However, the latest UK House Price Index shows that the London property market could be reviving again.
The average price of a home in London jumped 5.6 percent in the month from £498,083 to a record £525,893, adding almost £28,000 to its value.
Property experts have said the “revival” of the market was down to a number of factors.
This included the lifting of restrictions as well as foreign buyers interested in property.
Director of Benham and Reeves, Marc von Grundherr, said: “We’re now starting to see the London market accelerate through the gears where house price growth is concerned, with the largest monthly increase of all regions equating to a huge £28,000 jump in value in a single month.
“There are two predominant factors driving this market revival.
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“The first is a return to normality both in a social sense, but also with regard to our professional lives and the physical workplace.
“This has led to growing demand from domestic buyers which has laid a firm foundation for onward growth.
“The second is an influx of foreign buyers who have had little choice but to sit on their hands during the pandemic due to widespread travel restrictions.
“Now that these are starting to lift, we’re seeing interest pour in from foreign land and this is driving the market forward at speed.
“The tapered end of the stamp duty holiday and a potential increase in interest rates is unlikely to deter this interest and we can expect the London market to continue to strengthen over the coming months, regardless of what might happen elsewhere across the UK.”
Lawrence Bowles, senior research analyst at Savills, said: “Although London had the lowest percentage of growth [of the UK regions], 7.5 percent, values there rose more in pound terms than any other region: £36,469.
“It’s also the region where values rose fastest relative to people’s incomes.
“Our analysis compares house price rises to annual full-time earnings from ASHE in 2020. London values increased by 94 percent of median full-time earnings.
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“In more affordable regions, such as the North East and North West, prices grew faster in percentage terms, but rose by 63 percent and 72 percent of annual full-time earnings, respectively.”
The biggest annual increases were in Tower Hamlets, Hammersmith & Fulham and Camden.
Lucy Pendleton of London estate agents James Pendleton, said: “The capital has turned a corner and we expect the London market to now mount a charge and make up for lost time that saw the regions get all the fanfare over the past 18 months.”
At the country level, the largest annual house price growth in the year to August 2021 was recorded in Scotland, where house prices increased by 16.9 percent.
Wales saw house prices increase by 12.5 percent in the year to August 2021 while Northern Ireland saw property prices rise by nine percent over the year to Quarter Two (April to June) 2021.
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