The data also shows that prices increased by £707 last month, a monthly increase of 0.3% and have fallen only once in the past 17 months.
Overall there has been annual prices growth of 3% but this is largely due to prices moving upwards in London. Prices are down on an annual basis in Wales and the North of England.
Overall average annual house prices changes over the last three months have increased by 10.6% in Greater London, by 3.8% in East Anglia, by 1.5% in the South East, by 1.1% in the West Midlands, by 0.8% in the East Midlands, by 0.6% in the South West and by 0.2% in the North West.
Prices over the same period were static in Yorkshire and Humber, fell by 1.1% in Wales and fell by 1.3% in the North.
According to David Newnes, director of LSL Property Services, owner of Your Move and Reeds Rains estate agents, the catalyst for growth has been a significantly improved mortgage market.
‘Sales are 18% higher than they were last year, reflecting the improved conditions for buyers. A plethora of excellent mortgage deals are surfacing, cheaper mortgages have trickled into the market and low interest rates too have led to a boost in buyer activity,’ he said.
‘The impact of the Funding for Lending Scheme (FLS) has been significant, allowing banks and building societies to accelerate lending levels to a wider pool of borrowers. Gradually, competitive rates have emerged which should mean we will see a solid improvement to lending levels in 2013,’ he explained.
But he also issued a warning, saying that it is the strong performance of the London market that is dragging up the average UK house price and glossing over weaknesses elsewhere in the country, particularly the north of England and most of Wales.
Take London out of the picture and the national rise in prices falls to 1.1%. There is also a widening gap between housing types and income groups. London saw a rise of 5% in 2010/2011 and 5.7% in 2011/2012 in properties sold for £1 million plus, while the rest of the country sees a drop of 5.3% and 8.5% respectively.
He pointed out that London’s share of the whole £1 million and £2 million property market has grown rapidly, outdoing its counterparts, suggesting wealthy buyers still form a disproportionately large share of the market.
‘Despite difficult funding challenges, the government’s attempts to steer the housing market have been vital to the progress it has made so far. The property market has been recognised as key to a healthy economy. Numerous measures, such as the FLS, the Help to Buy, New Buy and First Buy, designed to stimulate lending for development and mortgages, are being taken to stimulate the market against strong economic headwinds,’ said Newnes.
But he added that there still needs to be an improvement in lending, particular to hard pressed first time buyers. ‘Lenders need the constraints that require them to hold eight times more capital in reserve for advances over 60% LTV to be loosened. Unless these constraints change, alongside the increased cheaper funding availability, lenders will find it hard to extend lending to many hard pressed first time buyers,’ he explained.
