East of England/Suffolk: House market to cool off after ‘feeding frenzy’ drives £20,000 annual rise
- Credit: Archant
The region’s overheated housing market will cool off this summer following a “feeding frenzy”, it has been claimed, after figures showed values have risen by £20,000 in a year.
The average house price in the east of England rose to a new record high in May, up to £273,000, according to the Office for National Statistics.
It was an annual increase of 8.6%, the third highest rise in the UK, and was the sharpest spike since August 2010.
In comparison, between January 2011 and September 2013, the average annual rise each month was 0.8%, with prices going down on nine occasions.
It come weeks after the Bank of England put curbs on riskier mortgage lending with a new cap on home loans and stronger checks to make sure borrowers can afford repayments.
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In Suffolk, the average home now costs £233,151 – an annual increase of £20,042 (a 9.4% rise), according to property website Zoopla.
Values are the highest in Aldeburgh at £424,699, and lowest in Brandon at £153,083.
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Elsewhere, they are £311,939 in Woodbridge, £259,449 in Bury St Edmunds and £216,694 in Ipswich.
Nationally, the fresh surge in values has stoked fears of a property bubble, amid growing concern that interest rates, frozen at 0.5% since March 2009, may need to rise within months.
Critics have also raised fears the controversial Help to Buy scheme will drive up prices by increasing housing demand without stimulating the supply of new properties.
Jan Hytch, the East Anglian-based president of the National Association of Estate Agents, said: “There is a feeling the market is settling nicely now and activity is cooling off after a feeding frenzy at the start of the year, which is not a bad thing.
“There were lots of transactions that should have been spread out over the last three or four years, but haven’t because of the recession. A lot of things came together which brought confidence into the market.
“London agents are now saying the epicentre of a white-hot volcano which was distorting the market is now cooling down – so hopefully we won’t see property prices rise this year like the last six or 12 months.”
Alex Leader, of the Ipswich branch of estate agents Savills, said the region is experiencing a “slow, steady growth”, but warned hotspots could mask the figures.
He said: “We are seeing slow, steady growth and comparing the current state of play to 2007 peak values is a useful way of benchmarking recovery.
“Analysis of our own prime residential figures by our research team shows that here in Suffolk we have recorded quarter on quarter growth of 1.3% and year on year growth of 6.2%, leaving the county -3.4% below the height of the market.”