House prices soar 12% in a year

Published: Tuesday 18th November 2014 by The News Editor

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House prices leapt by 12.1% in the 12 months to September, marking the fastest annual growth seen since July 2007, according to official figures.

The average house price across the UK stood at £273,000 in September, which is £1,000 lower than an all-time high recorded in August but still nearly 12% higher than typical values during the previous peak of the market in 2008, t he Office for National Statistics (ONS) said.

A typical first-time buyer faces having to pay 13.3% more to get on the property ladder than they did a year ago.

This is the highest annual price increase for first-time buyers since March 2005. Someone climbing the first rung of the property ladder now needs to pay £209,000 on average.

The ONS said house prices are continuing to “increase strongly across the UK, with prices in London again showing the highest growth”.

Values in London have increased by 18.8% over the last year to reach £508,000 on average. The East saw the next highest annual price growth, with values there lifting by 13.4% over the 12 months, which is the strongest year-on-year increase seen in the East since August 2003.

However, there are signs that the pace of house price growth is softening. The ONS said that in a number of regions, including London, prices have fallen back from the record levels seen in August.

On a month-on-month basis, prices across the UK increased by 0.5% between August and September, which is a smaller uplift than a 0.8% monthly rise recorded in August.

Over the last year, prices have increased by 12.5% in England to reach £285,000, by 5.8% in Wales to reach £172,000, by 7.6% in Scotland to reach £197,000, and by 10.9% in Northern Ireland to reach £143,000.

House prices in England and Scotland remain above their pre-financial crisis peaks of 2008 but have dipped slightly compared with their levels in August.

Values in Northern Ireland are still sitting 45% below their pre-financial crisis high, while those in Wales are just below their previous peak, which was recorded in January 2008, the ONS said.

Toughened mortgage lending rules came into force across the industry in April under the Mortgage Market Review (MMR), which has caused some disruption to the market.

But in recent weeks, lenders have unleashed some of their lowest ever mortgage rates on to the market as they look to meet end-of-year targets. Swap rates, which influence how lenders price their mortgages, have also been falling.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said the ONS figures show “there is still plenty of momentum left in the market”.

He said: ” Swap rates remain low and lenders are keen to make up for lost ground caused by implementing the Mortgage Market Review. As a consequence, there are some excellent fixed and tracker rates available.

“With the spring likely to be a challenge for the housing market ahead of the general election, lenders will continue offering fantastic deals to entice buyers and those remortgaging.”

Campbell Robb, chief executive of charity Shelter, said: “Despite talk of a cooling market, these new figures show yet another rise in house prices and therefore yet another rise in the number of young people and families left priced out of a home of their own.

“Average house prices in England are now almost 10 times the average wage. Even if they stop increasing at the astronomical rates we’ve seen over the past year, buying a home is still a pipe-dream for those on average incomes, who remain stuck in the ‘rent trap’, unable to save for a deposit.

“The only way to bring home ownership back within reach of ordinary people is for politicians to commit to build more genuinely affordable homes.”

Published: Tuesday 18th November 2014 by The News Editor

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