London house prices surge by 31% since the last general election

23rd June 2014

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New research has highlighted the disproportionate growth in the London housing market when compared to the rest of the UK since the last general election in May 2010.

Under the Conservative-led coalition, average house prices in the capital have risen by a staggering £103,323, on average, from £331,711 in 2010, to £435,034 this year according to the analysis from comparison site Gocompare.com.

As such this means purchasing a property in London four years ago is the equivalent of having a second income of £25,830.

However, the figures show that the story is not the same across the entire country, as only five of the nine regions of England and Wales enjoyed any rise whatsoever over the four year period. The house price data also shows that the North/South divide is alive and well, as the North West, North East, Wales and Yorks & Humber regions all experienced a drop in house prices.

Though London house prices have risen by a staggering 31.15%, excluding the capital the rest of England and Wales only saw a rise of 0.16%, or £217.38, on average. Of the other regions, the South East experienced the most growth with a 7.8% or £16,384 rise in property values, which is still nearly four times lower than the boom enjoyed in London.

Conversely, the North East suffered the biggest drop in house prices as values fell by 8% from £107,717 in 2010 to £99,001 in 2014, an average slump of £8,716.

 

Matt Sanders mortgage spokesperson at Gocompare.com said: “it’s no secret that London is a particularly expensive place to live, however the difference between house price rises in the capital when compared with the rest of England and Wales really does lend weight to the phrase ‘London prices’.

“These figures will do little to comfort Londoners looking to get on the property ladder. However, those in other areas of the country should be reassured that despite talk of rising house prices across the UK, outside of the capital, there hasn’t been a big change in the affordability of property. And even with the recent tightening of mortgage lending rules, with low interest rates and competitive mortgage deals available it’s still very much a buyer’s market.

“With the European elections behind us and British political parties now focusing on next year’s general election, balancing the housing market and preventing a London bubble, must surely be a key issue.”

However evidence pointing to a cooling off in the UK’s property market is mounting as new figures highlight that home loans in May showed no gains on the previous month.

According to data from trade body, the Council of Mortgage Lenders (CML) gross mortgage lending amounted to £16.5m in May, in line with April’s figures while on a yearly basis, the numbers showed a more modest 11.5% rise.

In contrast, gross mortgage lending had been up some 35% year-on-year in April and by 36% year-on-year in the first quarter.

Recent market numbers have all suggested that the introduction of tougher affordability checks at the end of April via the City regulator’s Mortgage Market Review have resulted in an easing back of activity.

Howard Archer, chief UK and European economist at IHS Global Insight added: “The CML gross mortgage lending data for May adds to the evidence that housing market activity has –  at least temporarily – lost momentum recently; this looks to be at least partly due to the introduction of new regulations under the MMR. While the MMR only came into effect on 26 April, it is evident that some banks raised their mortgage lending standards before the new regulations kicked in.”

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