In the 12 months to the end of October 2012 UK house prices increased by 1.5%, slightly less than the 1.7% increase in the 12 months to September.
The ONS said that year on year increase reflected growth of 1.8% in England and 2.8% in Wales, which were offset by a decline of 2.2% in Scotland and 11.7% in Northern Ireland.
Annual house price increases in England were driven by a 3.4% rise in London and a 3.1% increase in Yorkshire and the Humber
Excluding London and the South East, UK house prices increased by 0.8% in the 12 months to October 2012 and on a seasonally adjusted basis, UK house prices increased by 0.2% between September and October.
In October 2012, prices paid by first time buyers were 1.8% higher on average than in October 2011. For existing owners prices increased by 1.3% for the same period.
David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, pointed out that house prices may not be rocketing upwards by anything like the speed seen before the credit crunch, but they have inched up on the back of a strengthened labour market and signs of an improving, albeit sluggish, mortgage market.
‘However, it’s still wealthier homebuyers with equity that are best placed to take advantage of the current housing market, and this is feeding though into greater regional disparities. House prices in London and the South East are streets ahead of the wider country by the ONS’ measure, and that’s without even factoring in cash purchases,’ he said.
‘The reality is that it is still tough on the ground for first time buyers, as tough capital requirements hamstring lenders’ ability to offer high LTV mortgages to new buyers despite the Funding for Lending Scheme. With prices for first time buyers rising by nearly 2%, many will face an even longer wait as they save for even larger deposits,’ he added.
‘Moderate house price growth is being supported by a mortgage market which continues to be restrained but is fundamentally robust, according to Paul Hunt, managing director of Phoebus Software.
‘The dreary economic picture and difficult funding conditions are making lenders cautious, but despite a shortage of mortgage finance for lower income borrowers, there has been a vast improvement in the availability of good mortgage deals for lower LTV borrowers. Competition among lenders at 60% LTV is likely to creep up to 65% and 70% next year,’ he said.
The figures mean that the market is moving in the right direction, said Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA).
‘House prices continue to remain reasonably stable across most of the UK although there are some regional discrepancies, with London and the South East seeing the largest increase. It is clear that the North/South divide is still a reality when it comes to the property market,’ he pointed out.
‘Although the 0.2% increase in UK house prices from September to October is not enough to significantly affect consumer confidence, it shows things are moving in the right direction. The Autumn Statement and subsequent analysis flagged up the slow pace of recovery. However, the market is stabilising and there are reasons to be more optimistic about growth in 2013/2014,’ he said.
‘As funding and competition increases, we can expect to see more appetite for innovative products in the housing and mortgage market, and IMLA members will be working to respond to consumers’ changing needs,’ he added.
Brian Murphy, head of lending at Mortgage Advice Bureau, said that while ONS House Price Index reveals average house prices have risen by a small percentage, Mortgage Advice Bureau’s National Mortgage Index’s findings saw a much greater change in average purchase prices. ‘Since January this year, average purchase prices are up by almost a fifth, rising from £190,775 to £228,420 in November. We also saw significant increases in purchase deposits, up by nearly 16% from November 2011,’ he said.
‘Regionally, similarly to ONS data, the National Mortgage Index reflected a particularly strong year of activity in London. Average purchase loan sizes in London are now 19.1% higher than January 2012, up by £52,759. London experienced the greatest increase in average purchase loan sizes over 2012 while Wales recorded the greatest decline. Loans fell by 16.5% or £17,154,’ he explained.
He also pointed our that the Bank of England’s Funding for Lending Scheme (FLS) has created some exceptionally attractive rates for borrowers to benefit from towards the end of this year. ‘For 2013, we hope to see the impacts of FLS continue and filter through to assist those less able to meet the average 30% deposit,’ he added.
