26 Mar UK property prices up 6.8% year on year, latest ONS data shows
UK house prices increased by 6.8% in January compared with a year earlier, taking the average home price to £254,000, according to the latest data from the Office of National Statistics (ONS). This is a monthly increase of 5.5% compared to December 2013 and the price growth was seen across all parts of the UK.
House prices grew by 7.1% in England, 6.9% in Wales, 1.4% in Scotland and 2.7% in Northern Ireland. London is again showing the highest growth at 13.2%, followed by the South East at 7.1% and the West Midlands at 5.3%. Excluding London and the South East, UK house prices increased by 3.8% in the 12 months to January 2014.
The data also shows that on a seasonally adjusted basis, average house prices increased by 0.6% between December 2013 and January 2014.
It means that first time buyers, regarded as an essential part of the property market recovery, are paying more. The ONS figures show that in January prices paid by first time buyers were 7.6% higher on average than in January 2013. For existing owners prices increased by 6.5% for the same period.
According to Peter Rollings, chief executive officer of Marsh & Parsons, with the average UK house price now over £250,000, it means that the bulk of transactions are within the 3% stamp duty tax band and this will provide yet more ammunition for critics who believe the Chancellor played a bad hand by not reforming stamp duty thresholds in last week’s budget.
‘The London property market is still soaring ahead, with a 13.2% annual house price increase which dwarfs that in the rest of the UK. The average property price in the capital is now over three times that in the North East. Unwavering demand from UK and overseas buyers is a key ingredient behind this rate of growth, and Prime London property continues to be a Mecca for property investment,’ he explained.
‘And with pensioners now freed from the shackles of annuity, the buy to let market could become a Holy Grail for retirement, offering unrivalled tax efficient investment,’ he added.
David Newnes, director of Your Move and Reeds Rains, part of LSL Property Services, pointed out that momentum is growing as lending has increased substantially in the last yea. ‘This is largely thanks to the combination of consumer confidence, an array of attractive mortgage deals and a real willingness on the part of banks to lend to borrowers with smaller deposits,’ he said.
‘Pricing is being driven by greater lending availability, positive consumer sentiment as the jobs market continues to improve along with the wider economy. Cheaper rates and increased high LTV lending has encouraged more first time buyers to invest in property,’ he added.
But he warned that rising demand for housing must be matched with rising supply if the government is to bring the cost of housing within the reach of first time buyers. In the context of the cost of living crisis which has been central in the latest Budget, building more homes is key so that there is less competition over available property. It’s important to ensure price rises move forward at a steady rate to allow the property market to stay healthy at all levels,’ he added.