East England and Northern Ireland boost UK house prices

UK average house prices increased by 5.7% over the year to June 2015 up from an increase of 5.6% in the year to May 2015, bringing the average house price in June to £277,000.

Related topics:  Finance News
Rozi Jones
18th August 2015
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On a seasonally adjusted basis, average house prices increased by 0.4% between May and June 2015, according to the latest ONS house price index.

During the year to June 2015, average house prices increased 6.1% in England (up from 5.8% in the year to May 2015), 0.8% in Wales (down from 2.7%) and 9.0% in Northern Ireland (down from 11.0%).

Scotland saw its first annual fall in prices since September 2013, down 0.6% over the past 12 months.

The pace of annual house price growth picked up in 6 of the 9 English regions in June 2015. The largest annual increase was in the East at 9.2% (the same as in the year to May 2015) followed by the South East (7.7% increase in the year to June 2015, down from 8.1%).

The lowest growth in June 2015 was in the North East; here prices increased by 2.8% over the year (up from 2.0% in May 2015). London prices increased by 5.3% over the year to June 2015 (up from 4.9% in the year to May 2015).

Excluding London and the South East, UK house prices increased by 5.2% over the year to June 2015, up from 5.0% in the year to May 2015.

The average price for properties bought by first-time buyers increased by 5.1% over the year to June 2015, up from an increase of 4.8% in May 2015. In June 2015, the average price paid for a house by a first-time buyer was £213,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 6.0% in the year to June 2015, up from an increase of 5.9% in May 2015. In June 2015, the average price paid for a house by a former owner-occupier was £321,000.

Paul Smith, CEO of haart estate agents, commented:

“The continued growth in house prices reported by the ONS comes as a result of a shortage of property supply in tandem with a rising level of demand. Our data shows that there are currently 12 prospective buyers chasing each property for sale. One reason for this is there are not enough suitable properties being built. For example developers are favouring apartments, which are great investment opportunities, but fail to satisfy the needs of growing families.

“In a drastic reversal of regional trends, it is not London driving national house price growth, but other areas such as the East of England and Northern Ireland which have seen price increases of 9.2% and 9.0% respectively. This demonstrates that the supply shortage is now a far-reaching problem that needs to be tackled imminently. The new All-Party Parliamentary Group for Housing and Planning needs to drive national action from the centre and it needs to think innovatively to effect real change in the UK’s housing market, which may include decisions that aren’t universally popular.”

Brian Murphy, Head of Lending at Mortgage Advice Bureau, said:

“In June, there were no shocks or surprises for homebuyers with annual house price growth increasing by just 0.1 percentage point from the 5.6% seen in April and May. Compared to this time last year, when buyers were faced with annual house price rises of 10.2%, conditions are looking far more affordable. Growth is also no longer restricted to the south, with a 9.2% annual rise in the East of England being the main driving force behind these figures. At the same time, price pressure in the capital has eased remarkably since last year, with annual growth down from 19.3% in June 2014 to just 5.3%.

“However, with the average house price at £277,000 and house prices still rising faster than wages, many aspiring homeowners will struggle to save the amount required for a deposit. While it is positive to see the rate of house price growth for first-time buyers is below that for existing homeowners, this is not far off the average UK growth. Improved availability of high loan-to-value mortgages – and not just through the Help to Buy scheme – would provide invaluable support for those struggling to meet deposit requirements.

“New dwellings have seen an annual drop in prices, suggesting Government initiatives to support and drive the new-build industry could be seeing some results. However, there is still a lot more that needs to be done in this sector, as the gap between supply and demand threatens to cause more affordability problems later down the line.”

Jonathan Adams, director of prime central London estate agency Napier Watt, added:

"Once again, one wonders how useful a national average property price is when it conceals significant regional differences, and even big discrepancies within the same city. The national picture is very different from prime central London, for example, where the housing market has clearly slowed down since the Autumn Budget and the significant increase in stamp duty for high-value properties.

"In prime central London the number of transactions has decreased while the number of properties coming to market has increased, leading to a marked rise in available properties. The balance of power in PCL has therefore shifted from seller to buyer over the past few months, a situation we expect to continue well into the Autumn.

"The big issue at the moment continues to be when interest rates might rise. This event feels a little closer, following comments from the Bank of England, yet many borrowers tend not to appreciate the impact of a rate rise until the first one actually happens - and with many youngsters never having experienced a rate rise, it will come as quite a shock when it does."

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