House prices in East Anglia and the East Midlands are rising at a faster pace than London after the rate of growth in the capital slowed for the fourth consecutive month, according to a new survey.
Price growth in prime areas across the South East has slowed because of the recent rise in stamp duty, according to the Royal Institute of Chartered Surveyors’ (RICS) residential market survey.
The monthly report charts the sentiment of chartered surveyors operating in the residential sales and lettings markets across the UK. The stamp duty rate is now at 10pc for homes worth more than £1m, rising to 12pc for homes over £1.5m.
East Anglia saw the strongest price rises in November, according to the sentiment survey, with 67pc of contributors reporting a growth in prices. This was led by the city of Cambridge, which has recorded higher house price growth since the recession than London, according to separate survey published last month.
“The winter slowdown is here but any good properties at the right price coming to the market are selling,” said Nigel Steele, an estate agent at Jackson-Stops & Staff.
In the East Midlands, 65pc of respondents forecast that prices would continue their upward surge, while in London the figure was just 17pc.
Sales of luxury property in London have slowed following stamp duty hikes for homes worth over £1m
Estate agents based in central London described a “lack of enthusiasm” to put luxury homes on the market with expectations rising that asking prices will not be met.
“The market is very sensitive. Stamp duty is affecting the market in a negative way, although the market under £1m is active. Prices in the higher bracket will have to be reduced to stimulate interest,” said John Frost, managing director at estate agency the Frost Partnership, which has branches across the east of England.
Change in house prices by region in the year to August 2015
Despite the slowdown at the luxury end of the market, prices rose across the UK as a whole, driven by dwindling supplies, with the number of new properties up for sale down for the 10th consecutive month. Buyer demand has outpaced supply across all regions over the past six months, and the supply of homes hit a new low in November.
The report’s authors said the severe housing shortage has led to an “unrealistic” property market in certain towns and cities, and the bubble is likely to swell even more following new housing policies announced in the Autumn Statement last month. These include new Help to Buy and Starter Homes initiatives.
While the policies are designed to increase access to home ownership, they are likely to contribute to continued price growth, said RICS.
“It remains to be seen how successful the Government’s latest set of initiatives will be in driving up the rate of new-build. But with the best will in the world, it is likely that the boost to demand will come through rather more rapidly than the expansion of the development pipeline,” said Simon Rubinsohn, chief economist at the organisation.
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