Sharp slowing in house price growth

Published: Tuesday 16th June 2015 by The News Editor

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House prices fell by 1.3% month on month in April, taking the average value to £271,000, according to an official report.

On a year-on-year basis, prices increased by 5.5% in April, slowing down sharply from a 9.6% annual rate of growth recorded across the UK in March, the Office for National Statistics (ONS) data showed.

The 5.5% annual rate of growth is less than half that seen last summer and is the lowest rate recorded since December 2013.

The ONS report said: “The pace of annual house price growth fell across the majority of the UK in April 2015.”

In London, which has been seen as the engine of the housing market recovery, prices increased by just 4.3% in the year to April. This was the lowest annual rate of growth for the capital since October 2012.

The annual pace of price growth in London in April is lower than a 6.3% year-on-year increase recorded in the South West of England and a 5.7% annual increase in the East Midlands.

But London continues to be the region with the highest average house price, at £493,000. Average house prices in London have fallen below a peak reached in August 2014 – but they are still more than one third (37.4%) higher than their pre-economic downturn peak in 2008.

With London seeing a cool down in price growth, the increase in values in in England is now being driven by the East, which has seen growth of 9.6% and the South East, which has seen an 8.4% increase in values, the report said.

On a year-on-year basis, average house prices increased by 5.8% in England to reach £284,000, by 1.3% in Wales to reach £169,000, by 2.2% in Scotland to reach £191,000 and by 8.8% in Northern Ireland, taking typical values there to £147,000.

The England and Scotland house price indices both fell from record levels seen in March, the ONS said. Meanwhile, house prices in Wales are 2.2% lower than a pre-downturn peak reached in 2008 and property values in Northern Ireland are 45.1% below their 2007 peak, the ONS said.

The North East was the region with the lowest average house price in April, at £155,000.

The figures showed that across the UK first-time buyers faced paying 5.8% more for a property in April than a year earlier, with the average starter home costing £209,000.

Howard Archer, chief UK and European economist at IHS Global Insight, said: “It needs to be borne in mind that the ONS’s measure of house price inflation lags many of the other measures as it is based on mortgage completions.”

He said a recent shortage of homes coming to market is putting an upward pressure on house prices, and continued: ” There are increasing signs that housing market activity is now on the up, and we suspect that housing market activity will continue to improve amid generally supportive fundamentals and reduced uncertainty following the decisive general election result.”

Property website Rightmove reported this week that across England and Wales, house-sellers’ asking prices reached an all-time high of £294,351 in June.

Rightmove said that, while there has been an upturn in demand from home-buyers in recent weeks, there has also been an “unanticipated” post-general election fall in the supply of new properties.

Published: Tuesday 16th June 2015 by The News Editor

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