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Official UK govt figures show surge in UK house prices

The data from the Office of National Statistics also shows that house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average.

The year on year increase reflected growth of 3.3% in England and 4.3% in Wales, offset by falls of 0.9% in Scotland and 0.4% in Northern Ireland.

Annual house price increases in England were driven by London at 8.1%, the West Midlands at 3.1% and the South East by 2.9%.
Excluding London and the South East, UK house prices increased by 1% in the 12 months to June 2013 and on a seasonally adjusted basis, UK house prices increased by 0.4% between May and June 2013.

In June 2013, prices paid by first time buyers were 3.9% higher on average than in June 2012. For owner occupiers, that is existing owners, prices increased by 2.7% for the same period.

It is good news according to Paul Smith, chief executive officer of haart estate agents. ‘This definitive government index shows that when London is excluded house prices in the UK went up 1.5% in the 12 months to June and by 1% when you remove both London and the South East from the equation. This is surely good news coming on the back of Bank of England governor Mark Carney’s intent to hold interest rates until perhaps 2016, allowing lenders to offer advantageous mortgage deals to prospective buyers,’ he explained.

‘House prices are now rising at their fastest since 2006 and all that is needed is more homes to come onto the market to provide balance to the flurry of demand. Talk of a bubble is premature, particularly outside London. With more stock, better availability of good value mortgages and more people in work there will be greater fluidity in the housing market,’ he added.

The figures are published on the same day that the latest monthly report from the Royal Institution of Chartered Surveyors shows that there has been significant growth in each and every part of the UK as the housing recovery, initially focused in the South East, spread to regions across the country.
 
The RICS report said that the West Midlands and the North East, which have suffered more than most since the market crash, experienced the biggest increases in buyer activity in July.

Consequentially, prices rose in the country for the fourth consecutive month and grew at their fastest rate since the market peak of November 2006. Notably, this was not only confined to more affluent parts of the country such as London, but every region saw growth as we enter the end of the summer period.

‘House prices continued their climb in June, with ONS reporting an increase of 3.1% over the year compared with 2.9% in May. London’s exceptional growth of 8.1% reflects high demand for residential property in the capital from domestic and foreign purchasers, yet interest across all UK regions has remained strong,’ said Brian Murphy, head of lending at Mortgage Advice Bureau (MAB).

‘Despite concerns over long term house price growth buyer confidence has surged across the country this month, with RICS reporting the greatest interest in the property market for four years. Brilliant fixed rate deals have boosted consumer confidence further as high street lenders continue to create waves with unprecedented offers,’ he pointed out.

‘Government support and the Bank of England’s interest rate freeze have coaxed the market back into action. As lenders make the most of the generous funding available, the future continues to appear bright for home buyers,’ he added.

But Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA) had a few words of caution. ‘Although July’s residential market survey from RICS credits government measures with encouraging the pickup in activity, the latest house price index from ONS, showing the annual growth rate increasing from 2.9% to 3.1% in the space of a month, is a subtle warning about the potential long term impact of these incentives,’ he said.

‘The increasing growth rate of house prices still needs to prompt house builders into greater action if we are to avoid a growing demand and supply mismatch. The market is enjoying better pricing and product availability, but perhaps the biggest benefit of the Funding for Lending Scheme (FLS) has been the positive impact on consumer interest, spurred on by Help to Buy,’ he explained.

‘Even so, the ONS findings show the on going challenge for first time buyers, who are on average paying 3.9% higher than this time last year, compared with a 2.7% increase for owner occupiers. There is a lot resting on the shoulders of the Help to Buy mortgage guarantee to improve access for people with low deposits.

‘Having opted for short term counter cyclical incentives to push the market towards further growth, the key issue now is improving supply otherwise the initiative runs the risk of backfiring,’ he added.

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