The report also discovered that annual price inflation reached a six month high in September, standing at 5.3% and bringing the average house price in England and Wales to £186,553.
However the number of property transactions has decreased over the last year. Between April and July sales volumes averaged 71,766 transactions compared to 78,330 per month in the same period a year earlier.
Jonathan Adams, director of prime central London estate agency Napier Watt, said that despite a modest monthly rise in the national average price in September, the number of property transactions suggests that "the market is perhaps not as healthy and functioning as well as it could be".
He said: "The breakdown of transactions by price range is revealing, highlighting a fragmented market in London with higher-value properties struggling to sell. There were 288 £2m-plus purchases in July 2015, compared with 370 in the same month last year. But in the £1m to £1.5m range the number of transactions rose from 821 in July last year to 840 this year, underlining the impact the increase in stamp duty on purchases over £2m has had on the market.
Rob Weaver, Director of Investments at property crowdfunding platform Property Partner agreed, stating that "the 1% price rise seen in September was driven by one factor above all: weak supply".
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), comments: “Following a small monthly increase, the average house price in September rose 5.3% year-on-year. This is not insignificant, but is a more moderate rate of growth compared to that seen in 2014. However, prices in the capital saw a significant jump of almost 10% over the year, with the average house price in London hitting almost half a million pounds. This is nearly one and a half times the average across the rest of England and Wales, showing first-time buyers or those with small deposits are effectively being priced out of the capital.
Generally, higher house prices are good news for existing homeowners, and not only when they come to sell. Improved housing equity means borrowers are more likely to be able to access the most competitive remortgage deals on the market. However, these benefits aren’t being felt equally across the whole country: the North East saw a monthly and annual fall in house prices.
Improved mortgage affordability is helping to counter concerns about rising house prices. However, borrowers are very aware that today’s rates won’t last forever: our research shows 96% of homebuyers opted for fixed rates in September* in a bid to protect themselves from rising interest rates. Those looking for a new mortgage deal shouldn’t be put off for too long, or risk missing out on significant savings.”
He continued: "The lack of property coming onto the market, coupled with the lack of new homes being built, is applying upward pressure on prices. Supply may have gone AWOL but demand is still very much there. This latest Land Registry data once again confirms how sales of properties valued at over £1.5m have fallen sharply following the introduction of a more punitive tax regime.
But with annual price growth of 9.6%, even the capital is lagging behind Reading and Luton, which have grown by a massive 15.3% and 14.2% respectively over the past year. The message emerging from this data is once again, how can we improve supply? The market needs innovative solutions from both the Government and private sector alike."
John Eastgate, Sales and Marketing Director of OneSavings Bank, commented: “House prices are bouncing back from what seemed like a moderating market, with annual price inflation reaching a six month high in September.
Year on year price increases had slowed over the summer, so these numbers reverse that trend and as long as the scales remain heavily tipped toward demand over supply, continued growth is fairly certain in the long term. Little respite then for first time buyers, who struggle with the need to match higher house prices with larger deposits. Strong mortgage lending figures have so far been supported by year on year growth in remortgage activity, so this acceleration in house price inflation may yet further impact on the purchase market.”
Stephen Smith, Director, Legal & General Mortgage Club & Housing, had this to say: “A greater availability of mortgages due to low rates, low inflation and increasing wages has stimulated an increase in demand in the market. This would be good news if there were enough housing available for people to buy, unfortunately, however, this is not the case. The lack of properties coming on to the market is making the process of buying a home more competitive, which is in turn pushing up prices beyond the level of inflation and limiting the amount of choice for those looking to buy."
Lora Roberts, portfolio manager at Ascend Properties, said: “It’s highly encouraging to see the north west enjoy the same monthly price growth as the south east, a feat that would have been unheard of 24 months ago. We’re now seeing six of the nine regions outside of the capital enjoy positive monthly growth within one percent of each other, reflective of strengthening local economies and a paradigm shift that shows London and the south are starting to have stiff competition.”
Peter Rollings, CEO of Marsh & Parsons, comments: “The mercury in the property market is rising, with a much warmer 1% month-on-month rise in house prices in September. And for the second successive month, London has posted the biggest boost in property values of any region.
But most of this heat is emanating from a shortage of homes for sale, especially at the more affordable end of the London property market and this will only escalate with an anticipated rise of interest rates in the New Year. Conversely, sales activity is looking decidedly cooler and the million pound plus market is yet to thaw out and get moving again since suffering the repercussions of more stringent stamp duty.”
