UK house price growth rose to 7.9% in the year to January, up from 6.7% in the 12 months to December 2015, according to the latest house price index from the Office for National Statistics (ONS).
Annual house price inflation was 8.6% in England in January, -0.3% in Wales, 0.1% in Scotland and 0.8% in Northern Ireland.
The large increase in house prices in England was fuelled by an 11.7% rise in the South East and 10.8% growth in London, shows the data.
Excluding London and the South East, UK house prices rose by 5.1%.
On a seasonally adjusted basis, average house prices grew by 0.9% between December and January.
The average UK house price is now £292,000, according to the ONS. Earlier this week, Rightmove reported that the average property is now worth over £300,000.
Many industry experts have commented on the new figures:
Stephen Smith, the Director of Legal & General Housing Partnerships, says: “House prices continue their steady upwards march, as they are likely to do for some time, unless Britain can address the lack of housing supply in this country.
“With the cost of owning a home continuing to rise well above both earnings and inflation, the gap between supply and demand is pumping up prices and making affordability an impossible dream for many – especially in London and the South East.”1
More and more young people believe that they will never get on the property ladder, as it is believed that it takes the average single first time buyer 13-and-a-half years to save a deposit.
Annual House Price Growth at 7.9%, According to ONS
Worryingly, three quarters of young Britons expect to stay in the private rental sector forever.
The Sales Director at New Street Mortgages, Adrian Whittaker, continues: “The ONS figures show a market that’s continuing the strong annual growth that characterised much of 2015. Competition for property is still fierce, and in this sellers’ market, the speed at which a buyer can secure a mortgage can be the difference between first and last place in the race to buy property.”1
Mark Posniak, the Managing Director of Dragonfly Property Finance, adds: “This latest annual house price data once again throws into sharp relief the contrast between the housing markets of England, Wales, Scotland and Northern Ireland. They may be geographical neighbours but they could be thousands of miles apart in terms of house prices.
“For annual prices in the South East to have outperformed London underlines an ongoing shift in demand away from the capital as people look for more value elsewhere. London will remain a formidable bastion of the UK’s property market, but for many its prices are an insurmountable obstacle.
“However, the strength of demand in the months ahead may well be reduced by worries about the impact of a potential Brexit, causing many would-be buyers to sit on their hands.
“The Government’s move against landlords, which officially starts next month, is a fundamental shift and has the potential to reshape the property market in the years ahead.”1
From 1st April, landlords will face changes to their taxes, notably the 3% Stamp Duty surcharge, which was confirmed in last week’s Budget.
Finance expert Paul Mahoney of Nova Financial has explained how the Budget announcements will affect landlords: /budget-reasonably-positive-believes-finance-expert/
Jan Crosby, the Head of Housing at KPMG, explains the ONS data: “Today’s ONS figures show a record high, with England outpacing the other areas of the UK for house price growth. When you look further into the facts, the rise is driven by ever by the South East of England, London and the East of England, with the percentage increase in the capital over the past 12 months more than double the rest of England when London and the South East’s rises are excluded.
“Of course, this comes as no surprise, and highlights both the broken and atypical nature of the market in those areas. As ever, the issue is down to supply versus demand, and while last week’s Budget did have measures, such as the Lifetime ISA, which are in part designed to help buyers onto the property ladder, the record didn’t change when it came to generating supply, with announcements effectively repeating or slightly extending previous reforms.”
He adds: “However, one particular Budget announcement could have an underlying effect on house prices; it will be interesting in a year’s time to see how much prices in the north have inflated, specifically around areas like Manchester and Liverpool, which are set to benefit following the Chancellor’s renewed commitment to infrastructure projects, including HS3, the trans-Pennine tunnel and improvements to the M62.
“It is certainly likely that property investment, especially from abroad, will increase in the north, and this will include housing projects – while this might be good for the economy, it could be bad news for those hoping to buy a home.”1
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1 http://www.financialreporter.co.uk/finance-news/ons-annual-house-price-growth-rises-to-79.html
