The latest House Price Index from the Office for National Statistics shows that house prices grew by 5.7% in England, 4.8% in Wales, 0.5% in Scotland and 4.8% in Northern Ireland.
House price growth is beginning to increase strongly across parts of the UK, with prices in London increasing at more than double the UK average - indeed, the annual house price increases in England were driven by rises in London (12.3%), followed by the East (4.6%) and the West Midlands (4.3%).
Excluding London and the South East, UK house prices increased by 3.1% in the 12 months to December 2013.
On a seasonally adjusted basis, average house prices increased by 0.9% between November and December 2013. In December 2013, prices paid by first-time buyers were 7.4% higher on average than in December 2012. For owner-occupiers (existing owners), prices increased by 4.7% for the same period.
Rory Penn, partner of London estate agency VanHan, says:
"Talk of a national house price bubble is overplayed although the ONS index indicates that the worst is over for the housing market. There is a structural lack of supply, a growing mortgage market and improving consumer confidence, all of which are boosting property prices. Regional house prices will play catch up on central London for a few years as mortgage financed buyers re-enter the market.
"Weak real earnings growth will keep a lid on growth nationally, however, although key markets will continue to outperform. Sensibly-priced stock, in London and elsewhere, is selling quickly.
"First-time buyers are paying significantly more than they were a year ago and if this trend continues, lack of affordability could start to become an issue. For now, however, it's the best opportunity for first-time buyers to get on the housing ladder for some years with interest rates at historic lows, even if some lenders are starting to increase their longer-term mortgage pricing."
Lucy Hodge, Director of Vantage Finance, said:
“It will come as no surprise that house prices in the UK increased for December 2013. For property investors, it’s a great time to move onto new projects and the liquidity in the market indicated by the price rise is also a welcome sight for brokers. The brokers and lenders that we work with are optimistic about the future of the housing market and since the end of last year there have been encouraging signs of sustained growth – and not just in London and the South East. Mark Carney spoke about the widespread rise in house prices and today’s figures are reassuring for those working in the sector.
“There has been some suggestion that this rise in house prices is unsustainable, which is true, but I believe that soon the market will readjust itself naturally. I don’t believe that we will see the so called ‘bubble’ burst as such. This rise in house prices is fuelled by economic growth, and liquidity returning to the property finance sector. The future looks bright for property investors and we look forward to seeing more of this growth.”
