House prices have soared past their pre-Credit Crunch peak and are now at an all-time high, new figures revealed today (Tues).
Data from the Land Registry revealed that a shortage of supply has pushed the average house price in England and Wales to #181,619.
This is a five per cent increase on last year, overtaking the November 2007 peak of £180,983.
London was the region with the most significant annual increase, with prices up 9.2 per cent. A typical home in the capital now costs #481,820.
The South-East had the second biggest rise, with the average price of £247,375 representing an increase of 8.4 per cent.
House prices have increased across every region of England and Wales over the past year, according to the Land Registry, which analysed sales figures from May.
The smallest increase was in Yorkshire and Humber, with prices up 1.4 per cent to £121,070.
But while house prices continue to rise, the number of sales has fallen.
From January to April, the average number of sales per month was 57,918 – down from an average of 66,949 the previous year.
The Royal Institute of Chartered Surveyor said the record prices were caused by a “simple case of supply and demand”.
Peter Bolton-King, global property standards director at RICS, said: “Supply is at its lowest level since we started recording figures in 1978. When you have this situation, it accelerates house price inflation.
“People used to stay in their homes for six years but now it’s double. We have an increasing population and they will need a roof over their head.
“The government needs to be building 200,000 houses per year and we are well short of where we need to be.”
Sales at the upper end of the market have been particularly badly affected.
While the uber-end, where billionaires will happily pay #90 million for a mansion, is buoyant, the £1 million-plus market is in a freefall.
The number of properties sold in England and Wales for more than #1 million in April 2015 decreased by 22 per cent to 874 from 1,114 in April 2014.
Trevor Abrahmsohn, boss of Glentree Estates, blamed the decline on last year’s stamp duty changes which are putting off buyers.
He said: “There is always a constraint on supply, but at the moment there is a shortage of buyers.
“In the Autumn budget, to fend off Labour’s Mansion Tax, stamp duty was increased from seven to 12 per cent at the higher end.
“Taxation should be there to raise money but it is too high and has badly affected the market.
“People who have to move will always move, but they need to be joined by those who would like to move. The government has hurt themselves where it hurts the most – in the pocket.”
Henry Pryor, a buying agent and property analyst, added: “Whilst more accurate and reliable than most, the Land Registry provides a snapshot of the market three months ago.
“The index is helpfully giving us the state of the market around Easter and I expect it to have calmed by the time we see the summer trends.
“Demand is still strong across the middle of the housing ladder but the rungs at the top and bottom are rotting as transaction taxes throttle the high end and those at the bottom struggle to qualify for mortgage finance.
“Increasing dependence on cash buyers in the market mean that Government is losing control of prices since the enthusiasm of the 40 per cent of people buying homes with a mortgage cannot be tamed by raising interest rates.
“The question for buyers and sellers remains whether additional supply will come available this Autumn to soak up some of the demand currently driving prices.”