The ONS said that house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average. Indeed, excluding London and the South East, UK house prices increased by just 0.8% in the 12 months to July 2013. Prices were up 9.7% in London and 2.6% in the South East.
On a regional level, the year n year increase reflected growth of 3.7% in England and 1.8% in Northern Ireland, offset by falls of 2% in Scotland and 0.7% in Wales.
The UK HPI is still below the peak of January 2008, however, the England HPI, at 182.4 in July 2013, is now 0.9% higher than at the previous peak in January 2008.
The data also shows that in July 2013 prices paid by first time buyers were 4% higher on average than in July 2012. For existing owners prices increased by 3% for the same period.
The price increase in the year to July shows that the market is firming, according to Jonathan Hopper, managing director of Garrington Property Finders.
‘It is notable that the ONS states that growth remains stable, so despite there being some micro markets where there is some froth, we are clearly not experiencing what people like to describe as a bubble. What we are seeing is sustainable recovery fuelled by genuine demand from buyers needing homes and with the resources to invest,’ he explained.
But he also said that it is worth noting that the split in the market is becoming more pronounced and this is probably because of a shortage of supply in London and the South East.
‘Also noteworthy is that the effect of the government's Help to Buy scheme is working its way through with prices paid by first time buyers increasing by a bigger percentage than that paid by existing home owners, by 4% as opposed to 3%,’ he added.
But he pointed out that it is important to realise that the ONS statistics only cover mortgaged transactions, so by definition miss out roughly half of all transactions. ‘However this month it appears that mortgaged transactions largely reflect what we have experienced with our clients that are buying without a mortgage,’ he said.
As prices are rising at their fastest rate for many years it means that a strong recovery is evident across much of the UK market, according to Peter Rollings, chief executive officer at Marsh & Parsons. ‘The market is helped by an improving economy, low interest rates, and government backed schemes such as Help to Buy. But while the market buoyancy is clear, any talk of a housing bubble is wide of the mark. Prices in most parts of the country are still well below the market highs of 2007, and the recovery in many parts of the UK is relatively muted,’ he pointed out.
‘Ultimately, house prices can only increase at a rate that people can afford so while wages remain low, and lending continues to be checked, there is a limit to how high house prices can rise. However the London property market tells a different story, with price increases that dwarf those in the rest of the UK,’ he said.
He also pointed out that in the prime London property market, an imbalance of supply and demand means that prices rise faster than in other areas. ‘The huge demand for property in the most desirable parts of the capital, from both UK and overseas buyers, is helping to push prices higher. In the three months to June, we recorded 11% more buyers entering the market in competition for 14% fewer properties. Property is changing hands in record time and for close to the asking price, with 98% of the asking price for prime London property regularly being achieved,’ he added.
The news that house prices have continued to grow is another positive indicator that the industry is steadily recovering, with government initiatives stimulating the property market and tempting would be home owners to buy, said Brian Murphy, head of lending at Mortgage Advice Bureau (MAB).
‘The ONS figures should go some way to ease concerns that Help to Buy is already driving property inflation at a dangerous rate. Although house prices in London are increasing significantly faster than the UK average, overall house prices have risen at a stable rate, suggesting a recovery that is sustainable rather than combustible,’ he explained.
‘Heated competition between lenders means affordability is still excellent. With such price variation between different parts of the country, the regional know how of brokers, estate agents and surveyors holds the key for many people to securing a sensible mortgage deal on an appropriately valued home,’ he added.
‘However, the fact that prices paid by first time buyers have seen the biggest growth shows that we need to proceed with a degree of caution. Although the wider choice of products and competitive rates mean that obtaining a mortgage is less of a barrier to buying a house, all players in the market need to work hard to accommodate buyers with limited funds at their disposal,’ he concluded.
