While house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average. The year-on-year increase reflected growth of 3.7% in England and 1.8% in Northern Ireland, offset by falls of 2.0% in Scotland and 0.7% in Wales.
The UK HPI is still below the peak of January 2008. However, the England HPI, at 182.4 in July 2013, is now 0.9% higher than at the previous peak in January 2008. Annual house price increases in England were driven by London (9.7%), the South East (2.6%) and the East Midlands (2.4%). Excluding London and the South East, UK house prices increased by 0.8% in the 12 months to July 2013.
On a seasonally adjusted basis, UK house prices increased by 0.3% between June and July 2013. In July 2013, prices paid by first-time buyers were 4.0% higher on average than in July 2012. For owner-occupiers (existing owners) prices increased by 3.0% for the same period.
Andy Knee, Chief Executive of LMS, comments:
“This morning’s figures show that London and the South East continue to be a locus of activity, experiencing the highest growth over the past year (+9.7% and +2.6% respectively). Rising prices in this part of the country tend to overshadow the national figures – although UK house prices appear to have increased by 3.3% since July last year, when removing London and the South East from the equation this reduces significantly to just 0.8%.
“The Bank of England is set to discuss the possible formation of a ‘bubble’ in the housing market at its Financial Policy Committee meeting tomorrow, exploring what action should be taken to prevent fall-out from a ‘burst’. However, such vast regional discrepancies reaffirm the fact that the existence of the bubble is still in question. Due to the nature of the housing market you will always be taking a risk to a degree, so if you are able to source that all important deposit and have found the perfect property then make the purchase. No one can predict if, or when, this bubble will burst, and you don’t want to wait around only to find you have missed your chance.”
Oliver Atkinson, director of the online estate agents Urban Sales and Lettings, comments:
"The housing market is being driven onwards by a heady cocktail of confidence and fear. Confidence that the dark days are over, and buyers' fear of being left behind as another boom takes hold. The explosive rates of growth in London - up nearly 10% in a year - more than make up for the modest falls in Scotland and the North East.
"Buyer sentiment is improving steadily, and there is a growing sense that - despite the Bank of England's forward guidance - the current cheap mortgages won't be around forever. The result is the release of a lot of pent-up demand from first-time buyers, as those who have saved hard for a deposit decide that now is the time to take the plunge. But a stubborn shortage of supply is driving up prices, as many of those who had been waiting for the right moment are striking now for fear of being priced out of the market later on. We're seeing a steady migration of people from renting to buying as increasing numbers of those with savings calculate that they'd be better off purchasing.
"And while it's great that the housing market is functioning again, people have short memories. This sort of bullishness tinged with the fear of "being left behind" stoked the last property boom. There is a danger that some will make the same mistakes again."
Aston Goodey, MGM Advantage, said:
“The inflation yo-yo is wreaking havoc with household finances, as every week people are feeling the pinch as they fill their cars with fuel and put food on the table. Higher prices for everyday essentials mean many people are finding it increasingly difficult to make ends meet, and in an era of stagnant wage rises, making cut backs where they can in order to balance the weekly budget.
“For people on fixed incomes, including retirees, inflation can have a long and lasting effect on budgets and lifestyles. There is no simple answer, with people approaching retirement and looking to convert pension savings into an income stuck between a rock and a hard place. With annuity rates at near historical lows, and inflation remaining broadly steady, the need to look at alternatives has never been clearer.”
Brian Murphy, head of lending at Mortgage Advice Bureau, comments:
“The news that house prices have continued to grow is another positive indicator that the industry is steadily recovering, with government initiatives stimulating the property market and tempting would-be homeowners to buy. The ONS figures should go some way to ease concerns that Help to Buy is already driving property inflation at a dangerous rate. Although house prices in London are increasing significantly faster than the UK average, overall house prices have risen at a stable rate, suggesting a recovery that is sustainable rather than combustible.
“Heated competition between lenders means affordability is still excellent. With such price variation between different parts of the country, the regional know-how of brokers, estate agents and surveyors holds the key for many people to securing a sensible mortgage deal on an appropriately valued home.
“However, the fact that prices paid by first-time buyers have seen the biggest growth shows that we need to proceed with a degree of caution. Although the wider choice of products and competitive rates mean that obtaining a mortgage is less of a barrier to buying a house, all players in the market need to work hard to accommodate buyers with limited funds at their disposal.”
