Sales volumes reached 6,237 over the year, the highest level since 2007, following two consecutive quarters of growth.
Property prices also continue to rise but with no sign of a so called ‘bubble’, as long term average growth continues to average 9% per annum. The average price has now crossed the £1.5m mark reaching £1,552,400 whilst rolling annual price growth, which removes seasonality, was 10.48%.
Heaton explains:
"Compared with last quarter, sales in the core sub £2m sector of the market have shrunk 28% and the number of transactions under £1m is now less than 60% of the market.
"This reflects the fact that average prices are now well over £1m, so the lower end of the market is inevitably shrinking. It is also indicative of owners holding onto properties which are prime performers in the heartland of the Private Rented Sector. It does not indicate a lack of appetite to buy at this level: in fact, last week a 1 bedroom property in Paddington was sold by a client of LCP after six buyers competed in sealed bids. It was snapped up at 10% above asking price – a clear indication that buying appetite exists, but that the best properties are few and far between."
Q1 2014 also shows a positive picture for the national housing market. The average property price reached £251,014 following annual price growth of 3.37% and a rise of 1.4% over last quarter. However, prices appear to be bobbing around the £250,000 mark and this is actually 2.6% below the price reported in Q3 2013.
However, like PCL, transactions reached their highest level since 2007 after a sharp annual increase of 29% to 800,910.
Heaton concludes:
"Prime London Central continues to show growth in line with long term trends. There is no evidence of anything out of the ordinary which should be comforting news for investors thinking of coming into the market.
"This does not appear to be the case for more domestic areas just outside the Central zone where prices are being fuelled by increasing economic confidence, more availability of credit, despite the well-publicised crack down on mortgages and Chancellor Osborne’s flagship help-to-buy scheme. In fact, in some places, prices are exceeding £1,000 per square foot and edging much closer to prices in PCL.
"The rest of the country is showing signs of recovery although prices are only 9% above the pre-credit crunch high, almost seven years ago. This data would not suggest a bubble and, indeed, annual growth rates have been much higher in the past when no such fears were ever raised, namely 16.1% in 2002, 14.8% in 2004 and 11.6% in 2011. The national housing market tends to correct itself when circumstances dictate and it is possible that the current furore about house prices is unhelpful during a fragile economic recovery”.
