Buyers forced out of London by spiralling property prices have helped fuel a 10% annual rise in asking prices in the south-east – a rate that has now outstripped inflation in the capital.
Asking prices in the south-east are 10% higher than they were a year ago, said Rightmove, compared with a rise of 9.6% in London. This makes the region the strongest performing in the country over the last 12 months.
“The ripple effect of buyers priced out of London combined with those cashing in and moving out of the capital means that the south-east has taken London’s boom-town crown,” said Miles Shipside, a director at Rightmove. “Upwards price pressure is being further fuelled by a reluctance of homeowners in the hotspots of the south-east to come to market.”
Across the country, the price of property going on sale in October has increased by 2.6% compared with September. That pushes the asking price of the average house up by almost £7,000, to £271,669, said Rightmove. Average asking prices are £355,874 in the south-east and £596,692 in London.
Earlier this month, in a report prepared in conjunction with the independent consultancy Oxford Economics, Rightmove forecast that the south-east would be the region with the highest increase in property values in the next five years. It predicts the national average price will grow by a huge 30%, with the south-east seeing rises of 37% and London 33%.
The report predicted that Southampton would see the fastest increases in the country over the next five years, with values expected to jump 43% by 2019, adding nearly £100,000 to local prices.
“Those looking for the best price appreciation in the country should seriously consider the south-east, and some may wish to fine-tune their search to the top three locations of Southampton, Brighton and Luton,” said Shipside.
Despite the bullish longer term forecast from Rightmove, it conceded that overall house price inflation was slowing. The 2.6% national monthly asking price increase this month is the lowest October rise for six years.
Shipside said: “Sellers may still find that their asking prices are too optimistic in parts of the country where the supply of property exceeds buyer demand”.
A smaller increase, or even a fall, in the sale price of property would tally with the predictions made in a number of other recent forecasts. Most recently the Centre for Economics and Business Research said it expected average house prices across the UK to dip by 0.8% in 2015 after growing by an estimated 7.8% this year.
The rental market also appears to be slowing, with the monthly price paid by tenants falling in eight regions of the UK in September, according to the tenant referencing agency HomeLet.
The average monthly private rent in the UK (excluding London) is now £728, and £1,466 in London, it said. Despite the falls in areas such as Scotland, the south-east and east Midlands, overall rents have risen by 8.2% across the country in the last year, said HomeLet, part of the Barbon Insurance Group. Even excluding London from the figure brings rental inflation to an annual 4.6%.
“There can be an element of seasonality to the rental market, with September often recording marginally lower average prices than other months, perhaps due to the number of student letting agreements being signed at this time of year,” said Martin Totty, Barbon Insurance Group’s chief executive.
“However, with this month’s data being the second consecutive month of slower rental price growth, and house prices indices indicating a slowing of growth, this could suggest movement to a period of more settled rental prices.”