House prices increased by more last month than they have done in two-and-a-half years, according to Britain’s biggest building society, while international estate agents claim London leads the way with a near double-digit increase over the last year.
While that’s bad news for younger people who would like to escape generation rent and get onto the housing ladder, it’s good news for older homeowners who enjoy rising valuations for the wealth they have locked up in bricks and mortar.
Knight Frank reckons prime central London properties now change hands for an average of 9.9pc more than they did 12 months ago, largely because of a sharp increase in demand from foreign buyers; principally, Russians, Indians, Italians, Americans and French.
Liam Bailey head of research at the estate agent said: “London’s prime residential market has defied the global economic downturn.
Over the past three years every twist in the financial crisis has been greeted by yet another affirmation of the city’s exceptionalism.
“Since March 2009, when the tide began to turn after the global credit crunch, prices for prime London properties have risen by 49pc. In fact, prices have now risen to stand 14pc above their pre-crisis peak back in March 2008.
“Prices are not the only market metric to have surged. The nature of the market has shifted. In 2008 we sold prime London properties to 36 nationalities while in 2011 the total hit 62.â€
Outside the capital, demand from foreign buyers is lower – and so are house prices.
Nationwide Building Society calculates that the average house prices increased by 1.3pc in August to £164,729 but remains 0.7pc lower than a year ago. Robert Gardner, Nationwide’s chief economist, said: “Last month’s UK house prices increase was the largest monthly rise since January 2010, reversing the declines recorded in the previous two months.
“Given the difficult economic backdrop, the extent of the rebound in August is a little surprising. This may be explained by the surprising resilience evident in the UK labour market, with further increases in employment in recent months, even though the UK economy has remained in recession.â€
Property-owning pensioners are among the biggest winners from bricks and mortar’s resilience to recession. Their housing wealth is now worth £757bn, according to calculations by Key Retirement Solutions shows. Of course, nobody has made a penny profit until they sell and you cannot pay a gas bill with a paper profit. But, with so much doom and gloom elsewhere, many older homeowners may take some comfort from Key Retirement’s estimate that pensioners’ property wealth increased by £13.6bn during the last three months alone – that’s equivalent to nearly £3,000 per person aged over 65.
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