House price annual inflation was 8.2% in England, 2.8% in Wales, and 2.4% in Northern Ireland. But prices fell by 0.8% in Scotland, the data from the Office of National Statistics (ONS) also show.
Annual house price increases in England were driven by year on year growth of 11.4% in the South East, growth of 10.3% in the East and growth of 9.7% in London.
Excluding London and the South East, UK house prices increased by 5% in the 12 months to February 2016. Also excluding London and the South East, the average UK mix-adjusted house price was £216,000.
On a seasonally adjusted basis, average house prices increased by 0.4% between January 2016 and February 2016, compared with an increase of 0.8% in average prices during the same period a year earlier.
The index also shows that in February 2016, prices paid by first time buyers were 8% higher on average than in February 2015 while for existing owners prices increased by 7.4% for the same period.
London continued to be the English region with the highest average house price at £524,000 and the North East had the lowest average house price at £158,000. London, the South East and the East all had prices higher than the UK average price of £284,000.
David Brown, chief executive officer of Marsh & Parsons, explained that while annual growth was down slightly he believes that UK property prices are certainly on a solid footing and despite the regulatory knocks over the past year, London remains one of the leading regions out in front.
‘Government intervention has prompted a lot of yo-yoing in the housing market of late, and the last week of March was one of the busiest we’ve ever experienced. A sense of urgency was palpable in the last few working days leading up to the implementation of higher stamp duty on second homes and buy to let purchases, and solicitors were working around the clock to service more than quadruple our average number of purchase completions per day,’ he explained.
‘Now we’re over the hump and this immediate buy to let incentive has passed, activity is sure to level out into the summer months, but continued high levels of buyer demand will help to keep London house prices strong,’ he added.
Rob Weaver, director of Investments at property crowdfunding platform Property Partner, pointed out that first time buyers are still feeling the pinch, with average prices paid by them of £214,000.
He believes that as the rate of inflation on new builds is accelerating more than existing housing stock, demand is still outstripping supply but a mood of uncertainty over the June referendum on the country’s future in the European Union could slow house price growth.
He also believes that a dip in average annual house prices in Scotland perhaps reflects the fallout of tumbling North Sea oil prices, with the Aberdeen property market particularly hard hit.
‘With demand across the board so strong and supply so weak, rock bottom interest rates and a buoyant jobs market, prices look set to continue their upward trajectory towards the second half of the year,’ he added.
Richard Snook, senior economist PwC, pointed out that house prices are still growing much faster than earnings or other prices, even though overall consumer price inflation edged up slightly to 0.5% in March, and rising real house prices put owning your own home even further out of reach for those renting.
He also pointed out that this is the penultimate monthly release under the current ONS house price methodology. June’s new official UK House Price Index will use a new methodology. ‘This should give us a further insight into the property market, scooping up commonly missed elements such as new builds and cash purchases, while stripping out the weight of a small number of high end sales,’ he added.
Jonathan Hopper, managing director of the buying agents Garrington Property Finders, pointed out that London’s extraordinary run of price rises is slowing and it is falling further behind both South East England and East Anglia where annual rates of price growth still comfortably exceed double digits.
‘This trend is likely to continue, as the capital’s prime property, so beloved of international buyers, is more susceptible to concerns over the outcome of the Brexit referendum than anywhere else. The impact of the recent tax changes are also likely to be felt more acutely in London,’ he said.
‘London’s appeal as a safe haven investment destination for the global wealthy remains undimmed, but we are starting to see some buyers hold off their purchases until the Brexit uncertainty is past. For the rest of the market, any Brexit chilling effect is harder to pin down, and with low interest rates and demand far outstripping supply, prices continue to be driven upwards,’ he explained.
‘With the exception of Scotland, prices are rising in all parts of the UK. And while there are several clouds on the economic horizon, sustained buyer confidence and a chronic shortage of homes for sale will ensure prices keeping ticking upwards,’ he added.
The figures should be taken with a pinch of salt, according to Rishi Passi, chief executive officer of Oblix Capital. ‘Demand has been stoked up in the short term by buy to let landlords rushing to complete ahead of April’s stamp duty rise, but the overall trend is falling. With this further tax burden now in place, we’ll likely see house prices moderate, if not fall slightly, as people choose to sit on their hands in the run up to the EU referendum,’ he said.
‘While the possibility of a Brexit may make some pause for thought, infrastructure projects confirmed in the Budget such as Crossrail 2 and HS2 provide a strong foundation for the future of the property market, especially in the regions, which continue to follow in the footsteps of the capital,’ he added.
