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News: Ridiculous London prices hit 300K

Mon, 23 Jul 07

London has recorded the biggest increase in prices in Britain during the last year, largely reflecting the strength of the capital's economy...

The smallest price rises have been in the West Midlands (5.5%) and the East Midlands (6.6%) and where affordability, particularly for first-time buyers, has become an increasing issue.

Table 1: All Houses, All Buyers (Seasonally Adjusted)
2nd Quarter 2007 – Quarter Averages

Region

Index
1983=100

Standardised
Average
Price £

Quarterly Change %

Annual
Change %

North

615.0

155,188

4.3

9.4

Yorks/Humber

645.5

149,051

2.3

7.1

North West

596.2

152,510

0.7

6.9

East Midlands

634.6

165,880

1.8

6.6

W. Midlands

634.1

178,972

-1.1

5.5

East Anglia

640.5

192,701

2.5

10.9

South West

639.4

211,418

-0.4

10.0

South East

640.3

259,904

4.2

14.0

Grt London

786.4

313,122

4.9

18.4

Wales

631.1

163,328

-2.8

9.0

Scotland

484.9

140,262

0.6

15.9

N. Ireland

889.7

228,790

8.5

46.7

UK

636.0

196,525

2.0

10.7

North/south divide in England widens


The north/south divide in England has re-emerged over the past year.  Greater London (18.4%), the South East (14.0%), East Anglia (10.9%) and South West (10.0%) have all recorded double digit house price growth since 2006 Q2. 

All the other English regions have seen single digit growth over the period.  As a result, the difference between the average price in northern England1 and that in the south1 has widened from £81,681 in 2006 Q2 to £103,451 in 2007 Q2.

Tim Crawford, group economist, commented:

"The average property price in London is now above the inheritance tax threshold of £300,000 whilst the average price in the South East has risen above the 3% stamp duty threshold of £250,000. The typical homebuyer in London and the South East, in particular, faces a rising tax burden due to the government's continuing failure to increase the inheritance tax and stamp duty thresholds in line with house price inflation.

We call on the government to raise the stamp duty thresholds and the inheritance tax threshold in line with past increases in house prices over the past decade. We believe the government also should commit to index link all property related tax thresholds to house price inflation in the future.

Unprecedented popularity

Steve Lavers, Director of Linden London Developments, said:

 “This offers a clear signal that London’s property prices are still booming, unaffected by the recent slowdown reflected in the wider market.

"Only last week we saw reports that London’s central residential market has recorded substantial price growth over the last twelve months, reinforcing the capital’s unprecedented popularity among home buyers.

“Demand from international buyers at the top end of the market, in addition to the ‘city bonus’ investors has remained strong, resulting in escalating house prices, unrivalled by any other city in Europe.”

‘Privilege for the wealthy’

 David Bexon, Managing Director, SmartNewHomes.com, comments on the Halifax House Price Index released today, which reports that average house prices in London have broken the £300,000 barrier:

 “Homeownership is fast becoming a privilege for the wealthy with reports today that average house prices in London have broken the £300,000 barrier. This brings more bad news for the capital’s first time buyers and young families, both of whom are facing a continuous uphill struggle.

 “With average prices in the South East also reported as being in excess of £250,000 there appears to be little reprieve for those looking to step onto the housing ladder in the UK’s most expensive regions. As a result, we have been calling for Government to scrap stamp duty for first time buyers – offering them a lifeline to get out of rented accommodation and onto the housing ladder.

 “I would urge visitors to our website to sign up to our petition and to offer their support to this important group of aspiring homeowners.”

 To visit the petition: www.smartnewhomes.com/stampdutypetition

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