London property prices soar
House prices rose by 13.5% in the capital over the year to February, bringing the average price to £530,368, according to the latest official data.
Meanwhile, property prices in England and Wales rose by 6.1% annually taking the average price to £190,275.
On a monthly basis, house prices in England and Wales were down by 0.2%, according to the Land Registry’s February 2016 House Price Index.
The only other region to show double-digit rises was the South East, which saw house prices go up by 10.9% annually, with an average property price of £267,235. The East of England was not far behind, with price rises of 9.8% over the year and an average property price of £220,188.
The North East was the only area to see a drop in house prices over the year to February 2015, with prices down by -3.2%. This area also saw the largest monthly price drop, with prices down by 1.2%. In contrast, the North West witnessed the greatest monthly growth, with a rise of 1.8%.
Prime London areas such as Kensington & Chelsea and Hammersmith & Fulham showed a slowing down, with annual rises of just 5.6% and 7.3%. This contrasts with outer London areas, where Hillingdon had the biggest annual rise of 17.1%, followed by Havering (16.9%) and Lewisham (16.3%).
Million pound properties on the rise
There are now more property millionaires, with a 2% rise in homes in England and Wales selling for more than £1 million. The number is up from 1,052 in February 2015 to 1,077 a year later.
The Land Registry’s data – which is based on completed transactions¬ – also reveals that the number of repossessions fell by 50%, from 706 to 356, in the year to December 2015. In London, there was a drop of 67% in the number of repossession sales.
‘Demand is strong and supply is weak’
Commenting on the data, Mark Posniak, managing director at Dragonfly Property Finance, says: “With its double-digit price growth over the past year, the unique property microclimate of London and the South East is once again in evidence.
“With the exception of the East of England, the difference between the south-east corner of England and all the other regions is as pronounced as ever.
“With the London market where it is, the South East is well positioned for further outperformance in the short to medium term as buyers shift their focus beyond the capital.
“Property investors, both overseas and domestic, are increasingly looking for capital growth and yield potential outside London.
“There will naturally be a degree of uncertainty around Brexit, but the sense we are getting is that, however things turn out, it won't be a Black Swan for the UK's property market.
“With demand still strong and supply as weak as it is, the overall trajectory of the market is likely to be up.”
Richard Sexton, director of chartered surveyor e.surv, adds: “London may be leading the way, but the South East is catching up, alongside the East of the country – creating a corner of formidable property price growth.
“While encouraging anyone selling a home in these areas, this is also a potential obstacle for some buyers. Savings are struggling and government initiatives like the Lifetime Isa are still a drop in the ocean when it comes to building a deposit.
“It’s in the North East that first-time buyers are most likely to get value for money – and most likely to get a foot on the property ladder. It is a fact that imbalances in the UK’s property market are becoming ever starker.”
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
A homeowner’s worst nightmare; repossession is an action of last resort by mortgage lenders to recover money from borrowers that have failed to keep up with repayments on their mortgage or other loan secured on their home (see secured loan). Repossession is a legal procedure that has to go through several processes before the homeowner is evicted and the property reposed. These are: if a borrower keeps defaulting; the lender applies for a solicitor’s notice; the lender instigates possession proceedings through the court; at the court hearing a possession order is granted and sometimes a possession warrant; a bailiff is appointed and an eviction notice issued at which point the homeowner has two to three weeks to vacate the property.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.