Central London house prices rocket with average close to £1.4m

31st May 2013

House prices in the heart of London have rocketed in the past year taking the average home cost to almost £1.4m writes Philip Scott.

According to the latest figures from HM Land Registry, house prices in the prime areas of the capital jumped 13% over the year to end of April to reach a new high of £1,379,142 – six times higher than England and Wales.

The performance has been boosted by a number of high value transactions being registered and a particularly strong performance above £2m.

Five sales above £10m were registered with the most expensive sale taking place in Bolney Gate, in the City of Westminster, a terraced house which sold for over £18m. Transactions overall in the area have increased 60% with 88 purchases taking place this month, compared with 56 in April 2012.

The cheapest sale across England and Wales, took place in a terraced house, in Egremont, Cumbria for £7,000.

The average price in the country has reached £234,957, showing a fractional growth since March. However, versus this time last year prices are 5% higher.

Naomi Heaton, CEO of London Central Portfolio says: “The stimulus of the low cost of sterling, cheap debt and the Capital’s enduring appeal has fuelled a further influx of international investors. This has led to increased transactions at the top end of the market which is contributing to the upward rise in average prices.”

April’s data also brings good news for the Government as transactions in England and Wales shot up by 12% in just one month, a potential indication that their stimulus schemes have begun to take effect.

The most notable increase in sales in England and Wales has been in the £200,000 and £250,000 price band where transactions jumped by 15%. Average prices are now approaching the £250,000 mark, where stamp duty rises from 1% to 3%, a rise in tax from £2,500 to £7,500.

“When the tax was first introduced it was never intended to be a tax on the ‘every-man’ but now it is seriously impacting on the average home buyer. Since 1997, when stamp duty was increased to 3% for properties over £250,000, average prices have increased by over 3 times. However, the threshold has never been revised upwards. It is time the Chancellor took action to enable people to trade up opening up the market for first time buyers, rather than continuing to line the Exchequers pockets,” adds Heaton.

23 thoughts on “Central London house prices rocket with average close to £1.4m”

  1. Forbin says:

    Hello Shaun,

    No failure here , move along now

    Greece stayed in the Euro and that was the plan all along

    As for anything else that might happen , well you know , you gotta break eggs to make an omelette

    Well thats the view of the Eurocrats ( Eurocratic oath – one leaves – ever ! )

    As for the people and Greek economy – well even dead cats bounce you know.

    Soon as as there’s any sign of recovery then you’ll hear the praise !! and “its was all worth while !! ”

    quite , maybe …

    Forbin

    1. Forbin says:

      EDIT should have read ” no-one leaves – ever!”

      1. Anonymous says:

        Hi Forbin

        Musically and lyrically it would appear that the Eagles were on the case when they wrote Hotel California.

        “Last thing I remember, I was Running for the door
        I had to find the passage back
        To the place I was before
        “Relax, ” said the night man,
        “We are programmed to receive.
        You can check-out any time you like,
        But you can never leave! ”

        Who would have thought that it would become the Euro federalists theme song?

      2. Anonymous says:

        DC now has his chance to lay out a constructive agenda for EU reform. I’d hope it includes accountability and value for money oversight, plus the provision for effective centralised prosecution of those who misspend EU funds. (Prepare for Italian, Bulgarian, Greek, Romanian, etc veto threats)

        But if I was betting my money, I’d place it on Brexit, an accountable EC just needs too many pigs flying simultaneously.

  2. GusBmth says:

    Hi Shaun

    Over the past 5 years, the yields on Greek Government 10 year Bonds have moved from 5% to 35% and back down to 6%. How does that fit with the need for another large debt haircut? It seems that the ‘bond vigilantes’ have taken extended gardening leave!

    1. Andy Zarse says:

      Well, for a start they’ve got twice as much actual debt as they had in 2008, even after the PSI. And can you confirm the yield will never rise again?

      1. GusBmth says:

        Absolutely! A yield of 6% seems like a massive mis-pricing of risk. In a low yield world, investors ‘chasing yield’ seems to mean investors being very poor at pricing actual risks. I wonder whose buying Greek Govt debt at these levels?

        1. Anonymous says:

          Maybe the bond vigilantes have moved on from CDS insurance, and calculate that politicians can be persuaded or bought more cheaply -> to provide a taxpayer funded bailout.

          Remember Gordon in 2008 claiming he’d saved the world from a 1930s depression. Took some chutzpah to ignore the bust after his claims to have “ended boom and bust”.

          Vampire squid – “master of puppets”, Metalica

        2. Andy Zarse says:

          Anyone would think there was a functioning bond market! My guess is the bonds are being bought up by Greek banks… As Shaun has pointed out before, how could this possible go wrong!

          And on a musical note, how about Average White Band and “Let’s go round again”. We will see in due course if they succeed in turning back the hands of time…

          1. Anonymous says:

            Hi Andy

            Nice! The lyrics from that song work well about this don’t they?

    2. Anonymous says:

      Hi Gus

      The yield fall came about as markets accepted that the Euro authorities and perhaps the IMF were in for the long haul. So they returned in essence to the previous policy of pricing Greek bonds over German bunds. A factor in this was the promise of Outright Monetary Transactions which have never been used.

      Added to this is that nearly any yield is perceived as valuable in these times. Especially as Greece so far has actually only had one bond issue. Another is due tomorrow and if Greece abandons the Troika and issues its own paper it may not be long before the bond vigilante band strikes up again! Even at these new lower rates Greece cannot afford to fund itself.

      The other factor is that the next haircut is expected to be mostly and perhaps all from the official sector (ESM,EFSF and ECB).

      1. GusBmth says:

        Hi Shaun

        Thanks for such a detailed reply.
        If Greece cannot afford to fund itself at these lower rates, then it has a problem, because it is dependent on the European monetary authorities. For political reasons and to maintain the cohesion of the Euro, the next haircut on official sector debt will almost certainly be too small to really help, but big enough keep things ticking over.
        Tragically for the people of Greece, it seems that an extended economic depression is one of the costs of maintaining the ‘integrity’ of the Euro.

  3. Pavlaki says:

    Shaun,
    I think you know my opinions on Greece from previous comments but I would add that everything I hear from my Greek friends is negative. Child benefits cut, pensions likely to be trimmed further etc etc. two friends have been unable to afford their IKA payments (NHS contributions) and in the event they need medical attention, they will not get it. Pharmacies now no longer stock many important drugs and a German investigation into the Greek public health system described it as catastrophic. It is a very sorry picture indeed.

    Claims by the government that the economy is improving refer to the fiscal economy and not the real world. I see that Portugal is also claiming that their economy is out of recession and on the mend. I will be there in a few weeks time and look forward to hearing what the Portuguese think about that claim!

    1. Anonymous says:

      Hi Pavlaki

      Portugal is currently being hit by the problems at Espirito Santo yet another bailed out bank which finds itself in ever more trouble.

      http://www.bloomberg.com/news/2014-07-09/espirito-santo-bonds-tumble-to-records-amid-missed-note-payments.html

      As to the Greek health sector I have heard very similar stories elsewhere. I remember that the public service started the crisis with a substantial number of unpaid debts and it has gone from bad to worse since. It is a simply dreadful state of affairs.

  4. Andy Zarse says:

    Hi Shaun, to what extent do you think the picture of falling wages and reducing employment levels is going to affect the debt trajectory for Greece? Maybe there’s an answer in this for GusBmth too? Andy

    1. Anonymous says:

      Hi Andy

      I think that the falling wage levels and falling employment have increased the burden of the debt in terms of income and possible revenue. If we move to output just as we think we are approaching a quarter where the falls stop and we see a rise in real output we see that prices are falling. So real output fell by 0.9% in Q1 but nominal output fell by 2.9% and for bonds that is what matters….

      Each time there are hopes of a straight road another bend pops up.

  5. Anonymous says:

    Greece, a supposedly first world country – not if you ask transparency international – 80th place in perceived corruption. http://cpi.transparency.org/cpi2013/results/

    Corruption wrecks the capitalist wealth generating system. It’s not just the Greek health system which is a disaster – reputedly the tax system is unable to prosecute politicians and other mega-wealthy Greeks who have modest taxable income declarations.

    1. Anonymous says:

      Hi ExpatInBG

      I agree that the Euro area and IMF reform programme stalled early and has not made many inroads. Has there been any news on such issues in Bulgaria or have the recent issues left the front pages?

      1. Anonymous says:

        I see little on Greece’s economic reforms. Is it now 4 years that Lagarde, Trichet and Juncker have been fumbling in the dark in Greece ? And breaking Euro treaties in the process.

        I’d note that Bulgaria’s crisis in 1997 had strongly recovered much quicker. I agree with you on the benefits of devaluation -> it delivered a good recovery here. I’d ask Lagarde why they used different rules to help Greece’s recovery, and whether she thinks in hindsight Greece should have had a devaluation like Bulgaria did.

        The BCP’s coalition appointment of Peevski to the defence/national security portfolio’s shows them to be insensitive and plain dumb. But even they are too scared to denounce the IMF mandated currency board and it’s budget discipline. The reason : the currency board mandate has delivered real economic growth and monetary stability. I guess voters would crucify any politicians risking another painful currency crisis.

        http://www.novinite.com/articles/161885/Ognyan+Minchev%3A+Russian+FM+Could+Have+Effect+on+Governmentt+Resignation

        The news is more about whether Russia/Putin has instructed the BCP to rescind their parliamentary resignation.

        The EU is very popular with voters, can the BCP please their Russian friends and remain electable ?

        Sorry to diverge into international politics – but politics drives the economic decisions.

  6. Noo 2 Economics says:

    Hi Shaun,

    Unfortunately, if your questions were put to Mme Lagarde her response would be that Greece would have performed as predicted if she had implemented all the IMF structural recommendations timeously.

    We’ll never know if she’s right, but I know had the Greek people overthrown their Government in 2010 and left the EZ, they would likely be in the position predicted by the IMF in it’s 2010 report now.

    1. Anonymous says:

      Hi Noo2

      I have been in the default and devalue camp from the beginning as I never felt that the internal competitveness (aka wage cuts) argument was going to be enough. There is an irony in the fact that the arguments against were often about the risks of inflation when many of the same people are now worried about disinflation!

  7. dutch says:

    ‘The question of how this can ever be repaid simply deepens as we note
    that all public-sector debt was 1.75 times annual economic output as of
    the end of 2013.’

    Questions like this don’t feature on the entry exam for the BoE,I bet.

    The unemployment and wage deflation are quite stunning figures on their own and you do wonder quite how Greece will be able to avoid default let alone stay in the euro.

    Talking of Blondie,remember this one
    11.59
    http://www.youtube.com/watch?v=x7mEy0U7_XA

    1. Anonymous says:

      Hi Dutch

      Thanks for the further reminder of Parallel Lines which was quite an album. If you are a fan I recommend looking up the BBC4 documentary I saw a couple of months ago. Plenty of angst and anguish in the years since…..

      We got an insight to the entry exam for the Monetary Policy Committee earlier when Dr. Shafik was interviewed by the Treasury Select Committee. Apparently if you waffle boast and giggle you are well on your way to a pass mark. Knowledge of the UK economy seems a long way down the list.

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