ONS: Prices paid by FTBs 5.9% higher than in 2012

The latest ONS House Price Index, released today, shows that in the 12 months to October, house prices increased by 5.5% - up from a 3.8% increase in the 12 months to September.

Related topics:  Mortgages
Amy Loddington
17th December 2013
Mortgages

The year-on-year increase reflected growth of 5.7% in England, 2.0% in Wales, 3.3% in Scotland and 4.8% in Northern Ireland. House price growth is beginning to increase across parts of the UK, with prices in London continuing to increase faster than the UK average..

Annual house price increases in England were driven by rises in London (12.0%), the East of England (4.8%) and the West Midlands (4.7%) - excluding London and the South East, UK house prices increased by 3.1% in the 12 months to October 2013.

On a seasonally adjusted basis, average house prices increased by 1.4% between September and October 2013.

In October 2013, prices paid by first-time buyers were 5.9% higher on average than in October 2012. For owner-occupiers (existing owners), prices increased by 5.3% for the same period

Richard Sexton, director of e.surv chartered surveyors, commented:

“Collectively the property market is singing a sweet tune, with prices picking up across the country – although London remains the driving force behind the large annual jump. Monthly home loans have topped the 70,000 mark for the first time since the recession, and the mortgage market is becoming much more accessible, as lending to borrowers with small deposits has doubled in the past year.
 
“We must keep a tight rein on the recovery of the market, to ensure prices remain affordable for all. Help to Buy is extending a helping hand to lower equity buyers, and helping them build a deposit. Many parents are also digging deep to help their offspring stump up a decent deposit, although the high cost of living is continuing to chip away at household finances. But to get to the crux of the matter, the volume of house-building needs to be dramatically increased, particularly in the capital, where the competition for homes is forcing house prices up at a rapid rate.”


Mark Harris, chief executive of mortgage broker SPF Private Clients, says:

"House prices continue to soar in London, with an incredible 12 per cent rise in the 12  months to October. This surge in prices in the capital helped lift overall national growth to 5.5% - or 3.1%  once London and the south east are stripped out. This demonstrates the limitations of a national average price as it can mask significant regional differences. While London is a micro market of its own, other parts of the country are seeing far less activity and demand, which is keeping a lid on prices, although house price growth is beginning to increase elsewhere.

"Even though CPI has fallen yet again, fears of an interest rate rise sooner rather than later continue. However, while the economy looks to be improving and unemployment falling, the recovery is still tentative and there is a long way to go. The housing market is still some way off its peak in terms of prices and volume of transactions.

"Mortgage rates remain at rock-bottom and we expect this to continue in the spring despite the repositioning of the FLS monies away from individual mortgages and towards small businesses. Lenders are still very keen to lend with many telling us they are expecting a strong first quarter. This means keeping rates low and competitive, which is good news for borrowers.

"First-time buyers are paying some 5.9 per cent more for a home than in October last year. But with mortgage rates cheaper than they were then, home ownership should be more affordable. However, it is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens."

Andy Knee, Chief Executive of LMS, comments:

“The property market is continuing to accelerate with average prices up 5.5% from a year ago. Surging values are still being driven by the buoyancy of the market in London, however, with peoples’ appetite for property growing and demand for homes increasing, there is increasing pressure on the already limited supply of houses across the UK. The drastic shortage of homes will need to be addressed by the Government to prevent prices rising beyond reach.

“The steadfast climb we’ve seen throughout 2013 is set to continue into the New Year, with lending levels, driven by the array of accessible rates on offer, almost certain to follow suit.  However, there is a risk that The Bank of England will be forced to apply the brakes sooner than most commentators expect through a rise in interest rates and that the introduction of new regulations in April will act as a speed bump to the accelerating market.”

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