"The continued shortage of homes on the market remains one of the key drivers of house price growth, rather than a particularly resilient market."
Average house prices increased by 5.4% in the year to September 2017, up from 4.8% in August, according to the latest ONS and Land Registry house price index.
This brought the average UK house price to £226,000 - £11,000 higher than in September 2016 and £1,000 higher than in August.
The main contribution to the increase in UK house prices came from England, where house prices increased by 5.7% over the year to September 2017, with the average price in England now £244,000.
Wales saw house prices increase by 5.3% over the last 12 months to stand at £153,000. In Scotland, the average price increased by 3.1% over the year to stand at £145,000. The average price in Northern Ireland currently stands at £132,000, an increase of 6.0% over the year to Q3 2017.
The North West showed the highest annual growth, with prices increasing by 7.3% in the year to September 2017. This was followed by the South West (6.6%) and the East Midlands (6.4%). The lowest annual growth was in London, where prices increased by 2.5% over the year.
Jeff Knight, Director of Marketing at Foundation Home Loans, commented: “The continued shortage of homes on the market remains one of the key drivers of house price growth, rather than a particularly resilient market. Going forward, raised borrowing costs with the Bank’s rate hike are likely to encourage discounting to some extent, but – aside from squeezed wage growth and the impact on inflation dampening demand – the supply issue will keep asking prices up.”
“Focus will now be on whether measures to stimulate the housing market are seen through in the Chancellor’s Budget this month, with a rumoured stamp duty cut for first-time buyers as well as housebuilding pledges. As ever, we need to make sure there is a dual focus across the market so the quality and availability in the private rental sector is kept at a high standard for those who are not yet in a position to buy.”
Jeremy Duncombe, Director of Legal & General Mortgage Club, said: “Limited stock and high demand continues to drive annual house price growth, and it’s only making homeownership a more exclusive club. With house prices estimated at 7.6 times the average annual salary, for the majority of would-be first-time buyers the prospect of affording their own home is not a near possibility, leaving them forced to rent for longer to save a deposit.
“With housing set to be a key area for the Autumn Budget, we hope to see a real push from the Government to address the chronic issues in the market. We have already seen some steps in this direction, with an extra £10bn for the Help to Buy Scheme, but the underlying issue of supply remains. We’ve had years of promises and announcements, now is the time for the Government to really get started and take the action that is necessary to lead our housing market into a fairer future.”
John Goodall, CEO and Co-Founder of buy to let specialist Landbay, added: “House prices showed no signs of slowing down in September as they continued on in their upward climb. Up until this point, a combination of low mortgage rates and high rates of employment have helped balance out the squeeze on household incomes from stagnant wages and rising inflation. However, last week’s rate rise signalled the start of raised borrowing costs for the first time in a decade which is likely to curtail buyer activity in the coming months.
“As the Budget draws closer, we hope to see some ironclad commitments from the government on its plan for tackling the growing demand for housing. There may be no quick fix, but now more than ever the private rented sector will be relied upon by those unwilling or unable to buy a house outright. Without a radical house building plan for both first-time buyer homes and purpose-built rental properties, prices will continue to rise over the coming decades.”