19th November 2013
The London Central Portfolio is arguing that Land Registry figures demonstrate that there is no property bubble in the United Kingdom.
New third quarter statistics from Land Registry show what it calls a modest 3.6% rise in average prices in England and Wales over the year. Excluding Prime Central London it says annual growth reduces to just 2.9%.
It says that this marginal growth is three times lower than the UK’s long term average of 9.4%, as recorded by the Office of National Statistics since 1969. It suggests that prices have “crawled up” 11% in six years since the pre-credit crunch high in 2007, representing growth over this period of less than inflation which has totalled 15%.
Naomi Heaton, Chief executive of the London Central Portfolio, says: “Rolling annual price growth is our most accurate market indicator as it removes changes caused by seasonality or quarterly volatility. This shows appreciation is well below peak levels and that Mark Carney, the Governor of the Bank of England, has been spot-on to dismiss ‘bubble-happy’ commentators. Knee-jerk reactions to short term movements are not helpful and should be tempered by a proper understanding of market dynamics. Residential property prices in the UK move in cycles. Periods of growth are generally followed by periods of consolidation and we are now entering a new growth cycle”.
The firm says that when Prime Central London is excluded, the average price of property in England and Wales has reached £247,693 and it says this is dangerously close to the threshold at £250,000 where Stamp Duty jumps from 1% to 3%, representing a huge tax increase from £2,500 to £7,500 for the average buyer.
It argues that what it describes as a slab tax suppresses transactions, “not only curtailing the ability of people to trade up but the ripple effect prevents first time buyers getting onto the ladder”. Easing this tax burden would be a popular move whilst freeing-up the market without using artificial and potentially dangerous stimulus packages.
The firm adds that in terms of sales volumes, increasing availability of credit through Funding for Lending, marginal rises in employment and Osborne’s flagship help-to-buy scheme have all contributed to signs of positive growth. Annual transactions have increased by 9% year-on-year to 689,576 but this is still 39% below their pre-credit crunch high in 2007.