LETTING & ESTATE AGENT

No risk of house price bubble outside London, says Rightmove

No risk of house price bubble outside London, says Rightmove

Asking house prices in London have risen to “unsustainable” levels, pumped up by foreign investors – while outside the capital, asking prices fell in two regions over the last month.

Rightmove said this morning that with the exception of London, there is no risk of a house price bubble.

However, it underlined its concerns about the London market, saying that while prices in outer (as opposed to central) London are already more than double those in the rest of England and Wales, average wages are only 60% higher. In central London, asking prices are now within a touch of £1m at £937,110.

Driven by the latest London surge, the average asking house price across Britain is now £252,418 – 2.8% up from £245,495 in September.

In London, the monthly jump was 10.2%, equating to an extra £50,484 in asking prices between last month and this.

It means asking prices in London are nearly £30,000 higher than their previous record, and are 13.8% higher than this time last year.

Asking prices in London had fallen in August and September in a pronounced seasonal slowdown. However, the boom over the last month has reversed this entirely.

Rightmove director Miles Shipside said: “Some agents currently report there is a buying frenzy in parts of prime inner London, with available stock so low that their shelves are now bare.”

Rightmove said that to satisfy at least some of the demand, London needs an increase in supply from a combination of more new-build properties and more existing owners coming to market.

While the number of sellers in the capital this month is up 15% compared to September, September itself was 12% down on August

Rightmove said that the situation is exacerbated by overseas investor demand swallowing up much of the new-build supply, adding to shortages and creating upwards price pressure.

Shipside said: “London is a world city where overseas investors see real estate as a safe asset, at a time when safe assets are increasingly scarce, and developers are building and marketing a lot of one- and two-bedroom flats to meet that demand. While they can achieve volume sales at premium prices, this eats up a much-needed source of fresh supply and drags up existing property prices at an even faster rate.”

He said that as a result of the imbalance between supply and demand and sharply rising prices, Help to Buy is unlikely to help many buyers in London.

According to Rightmove, asking prices in “the more affordable” outer London boroughs are now £461,937 compared with an average asking price of £226,861 elsewhere.

The regions where asking prices have fallen this month are west midlands and Wales, while five regions, north, north-west, Wales, west midlands and south-west, have asking prices that are lower than this time a year ago.

In seven out of ten regions that do show prices higher than a year ago, price rises nevertheless lag inflation.

Even in the south-east, outside London, asking prices at an average of just over £300,000 are below the levels of July this year.