Agents have reacted cautiously to a surprisingly-high 2.5 per cent increase in house prices - in just one month - announced by the Land Registry.
Although transactions decreased sharply, the average house price in England and Wales now stands at £191,812 - this figure, for January, is up 2.5 per cent on December and is 7.1 per cent higher than a year earlier.
Lack of stock may lie at the heart of this price surge, as well as attempts to beat the stamp duty surcharge on second homes and buy to let properties: the Registry says some 18 months ago, from August 2014 to November 2014, there was an average of 81,656 sales per month. Yet in the same months of 2015, the figure was down to 78,652.
Jeremy Leaf, a former RICS chairman and north London estate agent, says the decline in transactions represents a worry for the market. “If people aren’t able to move in and out of the market when they want to, there will be an inevitable knock-on effect for the rest of the economy. With the high cost of moving, continued shortage of supply and affordability issues with tougher mortgage criteria, this situation looks unlikely to change any time soon” he says.
Nick Leeming, chairman at Jackson-Stops & Staff, says the surge in prices will probably end imminently because of the uncertainty caused in the lead-up to the EU referendum.
“People who may previously have taken the plunge to put their home of the market [may] hold off until the fog of uncertainty has cleared. The market will also be eagerly awaiting the outcome of the Budget announcement in mid-March to see what impact, if any, it has on issues such as stamp duty, buy to let investment and the chronic shortage of new homes” says Leeming.
The Land Registry says that London experienced the greatest increase in its average property value over the last 12 months with 13.9 per cent growth - sharply contrasting with the North East of England which saw a meagre 0.2 per cent.
“The going is getting tougher for first time buyers and anyone aiming to move towards the economic gravity of London and the South East. London has always been a city of mismatch between unaffordable and affordable boroughs. But now higher prices are triumphing across a much wider area, and some buyers are left with fewer options and less value for their money” admits Andrew Bridges, managing director of London estate agency Stirling Ackroyd.