The ONS have updated their index weighting reducing the average property price in London by £27,000 in February.
The Office of National Statistics (ONS) has released data showing average house prices in London are £524,000 in February after reducing £27,000 after reaching an all time high the month before of £552,000.
The South East of England has also seen a fall in house prices of £6,000 in February to £368,000 and across the UK average prices have reduced to £284,000.
Originally the ONS said that London was one of the regions that had fallen back from record highs, although they also explained the figures reflect index weights adjusted to keep pace of changing types of properties being bought.
For London and the South East there has been a shift weight to areas of lower average prices as well as from existing homeowners to first time buyers and new-build homes.
Reasons for prices changes uncertain
The reason behind the changes in house prices for the month of February make it difficult to determine if a weighting adjustment or market change is responsible.
The ONS has said the decrease in average prices for London is not unusual as between 2008 and 2015 there have been seven decreases from January to February.
Average property prices and annual changes for February 2016 from the ONS are shown below.
| Area | Annual Changes | Property Values |
|---|---|---|
| London | 9.7% | £524,000 |
| South East | 11.4% | £368,000 |
| East | 10.3% | £317,000 |
| England | 8.2% | £398,000 |
| UK | 7.6% | £284,000 |
| South West | 7.0% | £263,000 |
| West Midlands | 4.1% | £204,000 |
| East Midlands | 6.0% | £198,000 |
| Scoltand | 0.8% | £189,000 |
| North West | 2.1% | £180,000 |
| Yorks and the Humber | 1.5% | £180,000 |
| Wales | 2.8% | £173,000 |
| North East | 1.4% | £158,000 |
| Northern Ireland | 2.4% | £157,000 |
For England Average house prices are £289,000 having decreased £8,000 and Scotland are £6,000 lower reducing to £189,000.
Over a year the capitals average house price has increased 9.7% to February compared to the figure of 10.8% in January.
For remortgage buyers higher prices give them an opportunity to release capital to improve their home or buy a parking space.
Rising house prices in the capital allows the equity release mortgage buyer to access wealth in their property to repay an interest only mortgage, pay for care at home or gift to a family member.
New-build prices rising fastest
Over the year the price paid for new-build properties increased by 9.3% to February compared to 8.3% for the previous month. The average price paid in the UK for a new-build was £281,000.
The higher price of new-builds means buy-to-let landlords would need a larger deposit or higher rental incomes to cover the interest payments.
Price growth was slower for pre-owned properties at 7.5% over the year which is lower than the previous month of 7.9% and the average price paid was £284,000.
For first time buyers the price paid is higher by 8.0% for the year to February compared to 7.7% the previous month with the average price paid of £214,000.
The average price paid for existing homeowners was higher by 7.4% over the year, although this is lower than the previous month of 8.0%. The average price paid by owner occupiers was £336,000.
For these home movers that are buying more expensive homes, the gap between their current home and the next can increase significantly which means they need a larger mortgage or place an extra deposit.
What are your next steps?
Call our LCM mortgage brokers for advice if you are a first time buyer, want to remortgage your existing home for the best mortgage deal, moving home or are a buy-to-let investor.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your property for home improvements, holidays or even give to a family member.
Learn more by using the property value tracker chart, mortgage monthly costs calculator and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
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