Property Prices up 13.8% in London in the past year

The latest market trend data from the Land Registry shows that prices rose an average of 0.7% in February and have risen 5.3% since February 2013.

The average house price in England and Wales now stands at £170,000 compared with the peak of £181,658 in November 2007.

More than 70,500 residential properties in England and Wales were lodged for registration at the Land Registry in February ranging from £11,500 to £21,750,000.

Repossession volumes decreased by 24% in December 2013 to 966 compared with 1,278 in December 2012.

Unsurprisingly London has seen the greatest price increase in the past 12 months with prices going up 13.8%. Wales experienced the greatest monthly rise in February with a movement of 1.6%.

Commenting on the data, Nicholas Ayre, managing director of homebuying agency Home Fusion, said: “The gulf in property prices across the UK grows ever bigger with London house prices hitting a new all-time high in February, up 13.8% in a year. Transaction volumes are rising but are still some way off the peak of the market and the lack of supply is helping fuel soaring house prices in parts of the country. There are growing fears that if we are not in bubble territory yet it won’t be long before we are, with the Bank of England raising the alarm about borrowers over-extending themselves.

“The problem mortgage borrowers have is that they are competing against cash buyers who don’t have the same affordability constraints. Governor Mark Carney has commented that he can’t control house prices because he has no sway over those cash buyers who aren’t affected by interest rate rises. While buyers from overseas are playing a part, it is not just international purchasers who are in the fortunate position of buying for cash: many of my clients who do so are from the UK, and are downsizing from larger homes.

“Lenders are stricter and the bad old days where it was possible to borrow up to seven times income are long gone. However, borrowers still need to do a reality check and consider whether they could afford the mortgage if there was a 1% rise in interest rates – or more. If not, it’s important to be realistic and rein in the borrowing.

“Supply constraints are not going to be resolved anytime soon. The Government has made the right noises about building more homes but this takes time. In the meantime, prices are likely to rise higher and we could well find that the illusory bubble becomes a dangerous reality.”