The October data from the Land Registry's House Price Index also shows an annual price increase of 3.1%.
The region in England and Wales which experienced the greatest increase in its average property value over the last 12 months was London with a movement of 8.7% while Wales experienced the greatest monthly rise with a movement of 2.4%.
The region with the greatest annual price fall is the North East with a decrease of 0.8% and the North East also saw the most significant monthly price fall with a fall of 3.1%.
The most up to date figures available show that during August 2013 the number of completed house sales in England and Wales increased by 15% to 74,767 compared with 65,014 in August 2012. The number of properties sold in England and Wales for over £1 million in August 2013 increased by 27% to 1,104 from 871 in August 2012.
Peter Rollings, chief executive officer of Marsh & Parsons, said that despite a slight monthly dip as the market cools down for winter, there has been a significant improvement in house prices nationwide in the past year.
‘Compared to the difficult lending conditions a year ago, the property market today is almost unrecognisable. Record low interest rates have sent ripples of fluidity throughout the market and unleashed a barrage of first time buyers,’ he explained.
But he warned that this morning’s announcement by the Bank of England that it is scrapping the Funding for Lending scheme for mortgages will have an impact in the New Year and usher in a new stability to the market.
He also pointed out that while there is still chequered growth in property values across the country, London prices continue to speed ahead in a different gear. The 8.7% annual growth vastly outshines that in the rest of the UK. In Prime London in particular, prices are even higher and continuing to rise.
‘Our research shows that over half of all Prime London properties are now worth £1 million or more, reflecting intense demand from both overseas and domestic buyers for the best properties in sought-after postcodes. There are currently 18 registered buyers per property, fuelling sales to take place in record time and for close to the asking price,’ added Rollings.
Brian Murphy, head of lending at the Mortgage Advice Bureau (MAB), said that the Land Registry figures reflect a surge of consumer confidence in 2013 as potential buyers, bolstered by falling rates and government assistance through Help to Buy, were increasingly drawn to the housing market.
'However, this rise is far from meteoric and the news that house prices are down 0.2% month on month should help to quell fears of excessive price inflation. The Bank of England’s decision to withdraw the Funding for Lending Scheme (FLS) from the mortgage market from January will clearly impact mortgage rates, but it should also ensure a measure of calm going into 2014,' he explained.
'A steady rise in house prices remains positive news, especially as they are returning from a low base brought on by the 2007 recession. Help to Buy will ensure demand and consumer confidence continues to grow in the wake of FLS, while a responsible attitude to lending and a watchful eye from the Bank of England will continue to nurture the seeds of recovery seen this year,' he added.
Paul Hunt, managing director of Phoebus Software said that as lending levels have jumped dramatically in the past 12 all the signs are there that the mortgage market is taking steps in the right direction.
‘The substantial rise in house prices in the past year indicates that the market is moving rapidly on the road to recovery. There seems to be an increased optimism for prospective home buyers and clearly activity in the property market is building up. It is encouraging that lenders have been innovative in their approach and have pushed the market forward by supporting a wide range of borrowers,’ he pointed out.
‘Mortgage lending is more accessible now that credit conditions look to be easing. Low interest rates are attracting many new first time buyers as the impact of the Help to Buy scheme hits home. If this trend continues, we should see an increasing number of buyers able to enter the market and drive national house price growth from the bottom up,’ he added.
The Council of Mortgage Lenders said that the changes to the Funding for Lending Scheme to remove the incentives that favour mortgage lending announced by the Bank of England, reflect the improvement in funding market conditions that has been experienced in recent months.
‘Although the changes to the FLS may be a surprise, they are not a shock. Mortgage lenders are well equipped to meet their funding needs, as wholesale funding market conditions have improved and retail deposits are robust,’ said CML director general Paul Smee.
Paul Smith, chief executive officer of independent estate agency haart, believes that the scrapping of the Funding for Lending Scheme will hardly affect the housing market as mortgages are now cheap and products will remain competitive.
'The main barrier to people moving is the cost thanks largely to the punitive Stamp Duty which unfairly targets people living in London and the South where house prices are significantly higher. This tax needs reforming in the Autumn Statement next week,' he said.
'Generally there is very positive news for the housing market with the Land Registry showing a dramatic fall of repossessions at 29% year on year, house prices rising by over 3% outside London and activity picking up. People will move and put their homes onto the market if the costs of moving were more reasonable and if there was greater stock on the market. The Chancellor has a chance to really make a difference during his budget next Thursday,' he added.
But some want more clarification from the Bank of England on the end of Funding for Lending. David Whittaker, managing director of Mortgages for Business, said that if they intend to cease funding for residential mortgage lending only then that is one thing. But if the intention is to include commercial mortgages within the cut then that’s an entirely different story.
‘The line between commercial mortgages and business lending can often be a very blurred one, so if the intention is to remove funding for these loans as well then it could derail the scheme entirely,’ he added.
