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News: Price Boom: Is the fat lady singing?

Thu, 14 Jun 07

With the property market at a turning point, it all depends on where you live. Find out what's happening to house prices where you live...

It has been a bumper year for the select band of estate agents who work the gilded streets of Mayfair and Belgravia. During the past few months, the few square miles of the capital that are home to more billionaires than anywhere else on the planet have seen records broken – and broken again.

A terraced house on Cadogan Square, on the market for £25m, sold for a record £28m; a former office building on Upper Brook Street attracted 74 viewings and 10 offers, eventually going for 20% more than its £15m guide price.

Nor is it only what is known in agent-speak as prime central London that is booming. In Elephant and Castle – not one of the capital’s more salubrious areas – Savills last week sold a three-bed penthouse for an astonishing £2m.

Thirty miles to the south, in Reigate, at the heart of the Surrey commuter belt, Clare King, 38, an events director, has a different take on what’s going on. Her two-bed flat has been on the market since January, but, while she has been assured that the £269,950 price tag is reasonable, she has had only a handful of viewings. “We keep reading that prices are going up, but obviously they’re not,” she says.

Average prices falling in the Midlands

Shift the scene to the Midlands and things are looking even slower, with average prices falling. It is the same in parts of the northwest. Keep going north, though, and the pulse starts to quicken again: prices in Scotland are rising at an annual rate of 11.9%, and look likely to continue to do so.

The market in Northern Ireland has been even more buoyant, with prices in the province rising by an average of 46% in the past year, according to a study by the University of Ulster; the rise in East Antrim was a staggering 56%.

So, given all these contradictory signals, what is actually going on? Is one of the most prolonged housing booms in recent history – which has seen property prices in England and Wales almost triple in the past decade – merely pausing for breath, or is it really over? And, if it is the end, will it be a soft landing, or are we headed for a crash?

“It all depends on which part of the property market you are talking about: it’s London and its hinterland against the rest of the country,” says Yolande Barnes, head of residential research at Savills. Within the capital – which has effectively turned into a city-state – the market has been decoupled from incomes and is being driven by equity, she argues.

The effects of City bonuses, coupled with the seemingly bottomless pockets of Russian oligarchs and other international high rollers, are trickling down from the multimillion-pound mansions of Kensington and Belgravia to humbler parts of town, from Chiswick to Stoke Newington – and, now, Elephant and Castle.

A very different picture outside London

Step away from the warm glow of the capital, however, and you enter a very different place, one where the recent interest-rate rises – four since last August, with the prospect of more to come – have combined with growing problems of affordability to slow the market and, in some cases, drive it into reverse.

But it is a tale of more than just two nations: an investigation by The Sunday Times has revealed very different pictures across the 10 regions of England and Wales, and in Scotland and Northern Ireland.

Find out what's happening to the property market where you live by clicking on the links below:

(Unless stated, prices are from the Land Registry)

Source: The Times

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