U.K. house prices hit record as squeeze leads to 'extremes'

Prices for U.K. homes to an all-time high in September, reflecting a continuing shortage of property for sale and strong demand from wealthy buyers.
Prices for U.K. homes to an all-time high in September, reflecting a continuing shortage of property for sale and strong demand from wealthy buyers.PHOTO: REUTERS

LONDON (BLOOMBERG) - London led asking prices for U.K. homes to an all-time high in September, reflecting a continuing shortage of property for sale and strong demand from wealthy buyers.

Values sought in the capital rose 2.2 per cent from August to 620,003 pounds (S$1.34 millin), property-website operator Rightmove Plc said in a report published Monday. Nationally, they climbed 0.9 per cent to 294,834 pounds. The average 2,550- pound increase across the country was the largest for 13 years.

The figures come days after Prime Minister David Cameron faced questioning from new Labour Leader Jeremy Corbyn on the housing crisis, and precede a meeting this week when Bank of England officials will review potential risks to financial stability following more than six years of record-low interest rates. On an annual basis, asking prices were up 9.5 per cent in London and by 6.4 per cent in the country as a whole, according to Rightmove.

"Demand from those who can afford to buy remains high, and suitable supply remains tight, with the number of properties coming to market down 6 per cent on the same period in 2014," said Miles Shipside, director at Rightmove. That's leading to "extremes in market forces" in some parts of the market, he said.

The pound weakened in early London trading and was at US$1.5521 as of 11 a.m., down 0.1 per cent from Friday.

In London, the three best performers were the districts of Southwark, Kensington and Chelsea and Richmond upon Thames, each gaining about 8 per cent on average. If values in London continue to rise at their current pace, the average price of a home there will hit 1 million pounds by the end of 2020, Rightmove said. Nationally, the 15 highest-priced counties all rose at double the national average.

Corbyn, in his first head-to-head exchanges with Cameron in the House of Commons on Sept. 16, asked his initial question on housing. He told Cameron he had received 2,500 questions from people complaining about the property shortage, prompting Cameron to say that more affordable homes are needed.

"By the end of this Parliament, success I think would mean that we have seen a build in total of something like a million homes," Housing Minister Brandon Lewis said in a BBC interview. In the four years through 2014, the housing shortfall in England totaled more than 500,000 units, National Housing Federation research shows.

BOE financial-stability officials took action last year to stop homebuyers taking on debts they may later struggle to afford and they now want to strengthen their oversight over the home-rental market. The panel holds its next meeting Sept. 23.