London has 11 new £1 million neighbourhoods and most of them are in the suburbs, thought to be the last affordable areas of town for people hoping to get on the property ladder.
In a report, property agency Knight Frank said 11 new postcodes have crossed into the £1 million price bracket. This is defined as a postcode where 20 per cent of property sales have been above £1 million in at least one quarter since the start of 2014.
The 11 postcodes that fit into this category are:
Hammersmith, Maida Vale, Queen’s Park, East Finchley, Muswell Hill, Battersea, Vauxhall, Highbury, Kentish Town, Clerkenwell and Herne Hill.
Hammersmith alone has had five such quarters since 2014, making it the area that has undergone the biggest transformation in terms of £1 million-plus sales.
Property prices are going up much faster in outer London because the starting prices are lower than in the centre. Properties below £1 million grew 17.5 per cent in central London and 21.3 per cent in outer London in the two years to August 2015. Between £1 million and £2 million, prices grew 15.7 per cent in prime central London and 18.5 per cent in prime outer London over the same period.
Vauxhall, one of London’s new £1 million areas Vauxhall, one of London’s new £1 million areas Knight Frank said the old trope about foreign investors buying up property isn’t to blame for the sudden explosion of £1 million areas in the suburbs.
Instead, it’s lack of supply, which is forcing up prices in places like Vauxhall and making £1 million properties more common.
Demand for London property at below £2 million is expected to remain strong, with London’s population forecast to grow by more than 100,000 every year for the next decade.
“As house prices grow across London, it will create new markets where properties cross the £1 million thresholds,” it added.
Chancellor George Osborne has been accused of worsening the UK housing crisis, which is most acute in London. Conservative policy has focussed almost exclusively on measures that boost housing demand and not supply, such as the right to buy, help to buy and rent to own schemes. Only 141,000 homes were built in 2014, far short of the 230,000 needed to satisfy demand.
Record house prices drive remortgage boom
A combination of record house prices, cheap loans and a looming interest rate rise is driving a remortgaging boom in the UK, according to new figures.
Bank of England data shows a significant increase in the number of mortgages being approved, up to close to 69,000 in July from around 67,000 in June and 65,000 in May. The Daily Mail says an increase in remortgages is driving the upward trend, with the number of homeowner loans rising from around 36,000 to 38,000 as savers look to lock into the record low pricing ahead of a potential base rate rise.
Separate research published last week by the Mortgage Advice Bureau found the amount being borrowed in a typical remortgage deal, as well as the loan-to-value ratio, has risen sharply as prices have surged. The Daily Telegraph says price rises are driving the trend as homeowners “can afford to take more money out of their properties without overstretching… on monthly mortgage repayments”.
According to the Land Registry’s latest index, the average UK house price has set a new record after a 4.6 year-on-year rise in July to £183,861. While lower than some other indices, there is a broad consensus that prices are on the up and continuing to outstrip wage rises, primarily as a result of a lack of supply – in fact, the Land Registry data noted a fall in transactions of 15 per cent.
According to the Financial Times, the data also showed the “return of a two-speed housing market” in the UK, with prices in London and southeast and east England rising at close to double the rate of the country as a whole. Prices in the capital are about 40 per cent above their pre-crisis peak at £488,782. In northeast England, average prices are the lowest in the country at £100,670.