This was up from the 2.6% increase recorded in the 12 months to April 2013. However, excluding London, UK house prices have grown by 1.9% in the 12 months to the end of May.
On a regional basis there was annual growth of 3.1% in England, 0.8% in Scotland, 0.6% in Wales and 1.9% in Northern Ireland. This was good news for Northern Ireland as May was the first month that property prices have increased since February 2008.
London saw the strongest growth with prices up 6.6% but there was also decent rises in the North West and the West Midlands which both saw growth of 2.7%.
The data also shows that prices paid by first time buyers were 4.1% higher on average than in May 2012 and for existing owners prices increased by 2.5% for the same period.
But Brian Murphy, head of lending at the Mortgage Advice Bureau (MAB), expressed concern that first time buyers are bearing the brunt of the increases, although the arrival of 0% mortgages will help their cause.
‘Help to Buy has played a significant part in the market’s resurgence, with nearly to 7,000 reservations to date. However, the next step of the scheme must seek to improve market access. Despite the availability of record fixed rate deals, the current market favours higher earners and less affluent buyers are still finding their options limited as deposit requirements rise in line with house prices,’ he said.
David Brown, commercial director of LSL Property Services, also pointed out the effect of rising prices on first time buyers. ‘It is tougher news for anyone struggling to raise their first deposit. House prices are accelerating away from first time buyers 60% faster than they’re lifting the finances of existing owners,’ he said.
‘First time buyers are still facing a three pronged attack from encroaching inflation, weak wage growth, and paltry savings rates. That’s why the rental market is taking up the slack for plenty of households, as the monthly battle to make ends meet rages on,’ he explained.
‘Building a solid recovery in the housing market and the rest of the economy is vital. More homes are being built, although the market desperately needs more, especially since the latest government backed schemes are increasing demand from buyers,’ he added.
Paul Smith, chief execurive of independent estate agency haart, said that the confirms what the firm is seeing in it branches in terms of increased activity and a return to real positivite attitude among home buyers and sellers. ' One of the reasons why prices are continuing to rise is because of the shortage of property on the market, but we believe that will soon change as sellers see they can achieve their realistic asking price and will find a buyer very quickly,' he added.
