House price growth in England surged during February in comparison to the previous month and was driven by a rush in buy-to-let activity.
These are the key results from the latest Your Move Index, which suggests buy-to-let investors looking to complete deals before the Stamp Duty changes come into force in April 1st are pushing prices further upwards.
Rises
Average property values increased by 0.8%, or by £2,277 on a monthly basis. Demand from buy-to-let lenders and second home buyers led to a 12% month-on-month increase in sales.
Additionally, data from the report shows average prices were up 6.2% year-on-year. However, if London and the South East are excluded from this, yearly growth dips to 4.6%. The average house price now stands at £289,229.
In the capital, London house prices increased by 6.8%, or £36,903 during the last twelve months. The average price of a property in London is currently £582,783. Hull has also seen a significant rise in property values, rising by 0.9% in one month to hit a new record of £111,409. The city’s recently awarded City of Culture has undoubtedly had an impact on property prices.
Rush to complete
Richard Sexton, director of e.surv chartered surveyors, noted, ‘growth could be as a result of buy-to-let investors rushing to complete quickly to avoid April’s additional 3% Stamp Duty surcharge, which has also seen sales shoot up 11.8% since January.’[1]
Sexton feels that the figures represent brilliant news for existing homeowners, particularly those who are thinking of cashing in on additional demand. ‘Typical property values are now £16,866 higher year-on-year, the fastest annual growth rate seen in eleven months, driven by the gulf in the number of aspiring home buyers, compared to the limited supply of homes for sale,’ he observed.[1]
Buy-to-let rush drives house price growth
Regional records
The Index also reveals that the East of England’s property prices are rising quicker than those in London. In fact, the East of England saw the fastest growing property price increase of all regions of the country with a 7.2% rise in the last 12 months.
‘This pace is being fuelled by commuter towns, as London’s workers search for more affordable housing. The trend towards higher house price growth in cheaper areas can also be seen elsewhere,’ Mr Sexton explained.[1]
‘The upswing in Hull’s home values is due to the increase in new jobs resulting in more demand, with major firms including Samsung lifting employment in the city. Recently winning City of Culture 2017 may have provided an additional boost to demand for property within the city, as the pickup in tourism supports the local economy as a result of the award,’ he continued.[1]
‘Despite the upswing in the capital’s overall property values, sales have slipped 4.6% in the three months from November 2015 to January 2016, compared to the same three months one year earlier. This is largely due to a lack of homes for sale combined with more caution at the top of the market, rather than a general decline in demand, ‘Sexton concluded.[1]
[1] http://www.propertywire.com/news/europe/england-wales-buy-let-2016031011654.html