Average house prices in London break £300,000 barrier
The average price in Greater London broke through the £300,000 barrier for the first time in 2007 Q2 to £313,122, according to the latest Halifax House Price Index. This takes the average price in the capital above the new inheritance tax threshold of £300,000.The IHT threshold has failed to keep pace with house price inflation. Since 1995/96 house prices across the UK have increased by 219%, more than double the 95% increase in the IHT threshold from £154,000 in 1995/96 to £300,000 for 2007/08. The IHT threshold would now be at £490,000 - almost two-thirds above the current level of £300,000 – if it had been increased in line with house price inflation since 1995/96.
Average price in the South East rises above 3% stamp duty threshold of £250,000 ……
The average price in the South East, the second most expensive region, rose above £250,000 for the first time in 2007 Q2 to £259,904. The average price in the South East is, therefore, now above the £250,000 threshold at which stamp duty is payable at 3%. As a result, someone purchasing at the average price in the region in 2007 Q2 would have paid £7,797 in stamp duty; £5,302 more than a purchaser paying the region's average price (£249,471) in the previous quarter (2007 Q1).
Higher stamp duty bands unchanged since 1997 despite 188% increase in house prices
If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 -when the £250,000 and £500,000 stamp duty thresholds were introduced - the £250,000 threshold would now stand at £720,000 and the £500,000 would be £1,440,000. If the lowest stamp duty threshold had been increased in line with house price inflation since March 1993, it would now stand at £190,000. This would be £65,000 above its current level of £125,000.
All top eight towns with highest house price growth are in Northern Ireland ……
The eight towns that have seen the biggest house price rises during the last 12 months are all in Northern Ireland.
Newtownards is the UK's top property hotspot, recording a 64% rise in prices over the past year. The average price in Newtownards has risen from £139,610 in 2006 Quarter 2 to £228,310 2007 Quarter 2. Craigavon, a new town, has seen the second biggest rise in the UK with an increase of 57%, taking the average price from £132,727 to £208,280 over the past year.
Northern Ireland records the strongest house price rise in 2007 Q2 ……
House prices increased in most regions during 2007 Q2. The biggest price rises were in Northern Ireland (8.5%), Greater London (4.9%), the North (4.3%) and the South East (4.2%). There were house price falls in the South West (-0.4%), West Midlands (-1.1%) and Wales (-2.8%). These modest declines, however, should be seen in the context of the substantial price rises recorded in all three areas over the past five years: South West (63%), West Midlands (81%) and Wales (116%).
Northern Ireland is now the most expensive part of the UK outside London and the South East……
Northern Ireland has also recorded the biggest price rise in the UK over the past year with an increase of 46.7%, taking the average price to £228,790 in 2007 Q2. The dramatic increase in house prices over the past few years means that only London and the South East now have higher average house prices than Northern Ireland. In early 2005, Scotland was the only part of the UK with lower average house prices than Northern Ireland.
Prices in Northern Ireland continue to be driven up sharply by a combination of a strong local economy, high levels of immigration and high demand for properties from second homebuyers and buy-to-let investors in the Republic of Ireland.
Average price in North goes above £150,000 ……
The average price in the North passed £150,000 for the first time in 2007 Q2, reaching £155,188. Scotland (£140,262) and Yorkshire & the Humber (£149,051) are the only parts of the UK where the average price remains below £150,000.
London has recorded the biggest price rises in Britain over the past year…..
Greater London (18.4%) has recorded the biggest increase in prices in Britain during the last year, largely reflecting the strength of the capital's economy. The smallest price rises have been in the West Midlands (5.5%) and the East Midlands (6.6%) and where affordability, particularly for first-time buyers, has become an increasing issue.
North/south divide in England widens……
The north/south divide in England has re-emerged over the past year. Greater London (18.4%), the South East (14.0%), East Anglia (10.9%) and South West (10.0%) have all recorded double digit house price growth since 2006 Q2. All the other English regions have seen single digit growth over the period. As a result, the difference between the average price in northern England and that in the south has widened from £81,681 in 2006 Q2 to £103,451 in 2007 Q2.
Commenting, Tim Crawford, group economist, said: "The average property price in London is now above the inheritance tax threshold of £300,000 whilst the average price in the South East has risen above the 3% stamp duty threshold of £250,000. The typical homebuyer in London and the South East, in particular, faces a rising tax burden due to the government's continuing failure to increase the inheritance tax and stamp duty thresholds in line with house price inflation.
We call on the government to raise the stamp duty thresholds and the inheritance tax threshold in line with past increases in house prices over the past decade. We believe the government also should commit to index link all property related tax thresholds to house price inflation in the future."