Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

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Thursday, 26 March 2015

London housing boom cooked

UK housing market continues to slow

The latest Office for Nation Statistics (ONS) data from the Old Dart showed house price growth slowing to +8.4 percent year-on-year in January 2015, with a small seasonally adjusted decline being recorded in the month itself (-0.2 percent).

The average mix-adjusted house price in the UK as at January 2015 was £273,000.

The ONS mix-adjusted UK house price index at 207.4 is threatening to nudge against its highest ever reading of 207.7 recorded in August 2014.

However, although the index is now a comfortable 12 percent above its pre-economic downturn January 2008 peak reading of 185.5, as usual there is material variation evident between countries and regions.

House price growth by country

House price growth was driven by England (+8.5 percent), Scotland (+7.8 percent), Northern Ireland (+7.3 percent) and Wales (+4.9 percent), in that order. 

Overall the house price recovery now seems to be lacking momentum following the Mortgage Market Review (MMR).

The green line denoting the Northern Ireland boom, boom, boom and bust never ceases to amaze.

London boom running out of puff

In truth the UK housing market recovery has largely been a London story...and even within "the Smoke" there have been significant variances by postcode.

The average mix-adjusted London price increased by £8,000 in January 2015 to £510,000 on a seasonally adjusted basis, which is more that  double the average price of a house ex-London and the South East.

However, for some time it has been our contention - and you don't hear buyers agents say this too often - that the London boom is running out of puff for this cycle, with sentiment moderating considerably since the middle of calendar year 2014.

Over the past year mix-adjusted prices are up by +13 percent in London, +9.8 percent in the East and +7.6 percent in the South East, underscoring the excessively London-centric nature of the boom through this cycle.

The recover" in prices elsewhere has generally been sedate at best, although ex-London and the South-East prices were up by +6.5 percent in the year to January 2015.

Over the past 12 months price growth was slowest in Yorkshire & the Humber (+3.6 percent), the West Midlands (+4.3 percent) and the North West (+4.6 percent).