In the 12 months to the end of November 2012 UK house prices increased by 2.1%, up from a 1.5% increase in the 12 months to October, the latest official figures show.

The data from the Office of National Statistics show that house price growth remains subdued across most of the UK, although prices in London are increasing and prices in Northern Ireland are falling.

The year on year increase reflected growth of 2.5% in England and 0.8% in Wales, which were offset by a decline of 1.1% in Scotland and 8.5% in Northern Ireland. Annual house price increases in England were driven by a 5% rise in London and a 3% increase in the South East.

Excluding London and the South East, UK house prices increased by 0.8% in the 12 months to November 2012 and on a seasonally adjusted basis, UK house prices increased by 0.5% between October and November.

In November 2012, prices paid by first time buyers were 2.7% higher on average than in November 2011. For owner occupiers (existing owners) prices increased by 1.9% for the same period.

David Brown, commercial director of LSL Property Services, pointed out how London is propping up the market. When you discount London and the South East, where the concentration of equity rich borrowers is greatest, the rest of the UK is far from buoyant. The concern remains that first time buyers are bearing a greater burden than those who already own homes,ђ he said.

With high inflation eating into first time buyersђ ability to save, and pretty miserable savings rates on offer at the present we will continue to see strong demand for the private rented sector. Time will tell if the Funding for Lending scheme and innovative deals like the Springboard product announced last week by Barclays will help more first time buyers out of the private rented sector and into home ownership this year, he added.

Brian Murphy, head of lending at the Mortgage Advice Bureau, said it is especially significant that ONS shows prices paid by first time buyers rising at a greater rate than the overall average, some 2.7% compared with 2.1%.

He added that its index also shows that in the year to December 2012, there was a 13% increase in average purchase deposits to ң64,325, along with a 9% rise in average purchase mortgages to 150,427.

ÑRegionally, we have also seen the growth driven by purchase business in London and East Anglia. But with the national average loan to value for house purchases hovering around the 70% mark, it shows a greater amount of upfront capital is needed by potential buyers as well as increased access to lending which has real implications for first time buyers, he explained.

ґThe fact that cheaper deals are already appearing in January, with more flexible products to help first time buyers put forward deposits of just 5%, is welcome news that should help to boost mortgage activity. We are also seeing some of the best fixed rates on offer since the summer of 2007, so with more funding to come from the Bank of England via the Funding for Lending Scheme, it looks like being a busy year ahead, he added.

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