Price increase nearly three times average salary last year

A home in Wandsworth increased in price by nearly three times the average earnings in the area last year.

Figures released by the Office for National Statistics and the Land Registry show that in April 2014 the average price of a home sold in Wandsworth was £520,606 up by £98,345 compared with the same month in 2013 an increase of 17.5% Average earnings in the borough are £34,824 before tax, just over a third of the increase in house prices.

The average price of a home in London is now £435,034 compared to £172,069 for the rest of England and Wales. London prices are up by 17% compared to just 6.7% in the rest of the country

The sharp rise in prices in London, which rose by 4% in one month alone during April have increased the probability that action will be taken to calm the market. George Osborne promised new powers to the Bank of England last week which would allow them to impose greater restrictions on mortgage lending, capping the size of loans relative to the borrower’s earnings. The Governor of the Bank of England, Mark Carney, has also given strong hints that the next move in interest rates will be up and that it will happen sooner than most people expect.

There are already some indications that house prices may have peaked. The Royal Institution of Chartered Surveyors (RICS) say that demand for properties from prospective buyers has fallen as restrictions on mortgage lending already implemented, including checks on borrowers spending habits, start to bite.

June 18, 2014