UK house prices still up 2% year on year, latest ONS data shows

UK house prices have increased by 2% in the 12 months to the end of July 2012, according to the latest data published today (Tuesday 18 September) by the Office of National Statistics.

The figure is down slightly from the 2.3% increase in the 12 months to the end of June but it means that house prices remain relatively stable across most of the UK although prices in London continue to increase, whilst Northern Ireland prices are falling. The year on year increase reflected growth of 2.4% in England, which was offset by declines in Scotland, Wales and Northern Ireland of 1.1%, 0.2% and 10.9% respectively. Annual house price increases in England were driven by a 5.7% rise in London and increases in the East of England and Yorkshire and the Humber of 2.4% and 2% respectively. Annual house prices decreased by 1.3% in the North West and 0.5% in the North East. Excluding London and the South East, UK house prices increased by 0.6% in the 12 months to July 2012 On a seasonally adjusted basis, UK house prices were unchanged between June and July. Prices of new dwellings rose by 1.6% during the 12 months to July 2012, while the price of pre-owned dwellings increased by 1.9% in the same period. In July 2012, prices paid by first time buyers were 1.8% higher on average than in July 2011. For existing owners prices increased by 2% for the same period. Analysts said that the figures show that there is still a north south divide in terms of house prices and it is rises in London and the south east that are propping up the overall average. ‘These figures confirm that the housing market is robust, despite subdued lending activity across the board and the influence of central London stats on UK house price growth,’ said Paul Hunt, managing director of Phoebus Software. He explained that while there is still major stagnation at the bottom of the market, he is hopeful that the government’s recent announcement of a £280 million extension of its First Buy shared equity scheme and plans for a new homebuilding programme will boost first time buyer activity. ‘The Government’s role is crucial if mortgage lending targets are to be met in order to move the market forward,’ he added. David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, said that it is a testament to the resilience of the housing market and the important role played by cash buyers that house prices are rising annually, despite the bleak economic outlook and moribund mortgage market. ‘As lending remains suppressed across the country, activity has been supported by the vibrant demand from cash investors in London, and this has filtered outwards. While it is highly encouraging for home owners that house prices have risen, the downside is that it intensifies the pressure for new buyers who must save up even higher amounts for deposits, a feat made even harder by the very tight credit conditions at present,’ he pointed out. ‘Progress can be made if lenders focus on offering attractive mortgage products to help support those frustrated buyers currently relying on the private rented sector, which would drive activity right up the property chain,’ he added.

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