Property prices in the UK increased by 5% in the year to August 2017, taking the average price of a home to £225,956, the latest official index shows.
A breakdown of the figures published by the Office of National Statistics (ONS) shows that in England prices increased year on year by 5.3% and month on month by 0.7% to £243,520.
In Wales prices increased by 3.4% on an annual basis and by 0.1% month on month to £150,258 while in Scotland they increased by 3.9% year on year to £146,354 but fell month on month by 0.87%.
But the property market in London is not performing as well as the regions. The data shows that prices are up just 2.6% year on year and they fell by 1% month on month to an average property value of £484,362.
The regional data for England and Wales reveals that the North West recorded the greatest increase in average property price with a year on year increase of 6.5% and also the biggest monthly rise of 2.3%
The lowest annual growth was in London, where prices increased by 2.6% over the year. This is the ninth consecutive month where the growth in London house prices has remained below the UK average.
Edinburgh continues to lead the growth in Scotland with prices up 10.4% year on year to an average of £ 223,283 while Aberdeen is bottom with an annual fall of 4.8%, taking the average price of a property to £176,389.
The ONS data also shows that sales of UK properties with a value of £40,000 or greater increased by 6.6% between August 2016 and August 2017 but month on month they fell by 0.5%.
For the first time the index includes information on cash purchases and shows that they accounted for between 30% and 40% of all sales with the highest number in the South West at 40% and the lowest in London at 25%.
The upward trend in prices is set to continue until more affordable homes are built, according to Jeremy Duncombe, director of the Legal & General Mortgage Club. ‘Annual prices are consistently rising as more buyers chase fewer properties. As speculation around the Autumn Budget begins to build up, we hope there will be a genuine answer to boost supply that gives everyone a realistic the chance to own a home,’ he said.
But Jeff Knight, director of marketing for Foundation Home Loans, warned that house prices are just one part of the housing market puzzle and another rise in prices is not reflective of a buoyant market.
‘There appears to be areas of the country where there is more activity than others, most likely driven by greater levels of affordability. A rise in interest rates will place great strain on this affordability, despite the fact they will still be at an unprecedented low. We need more housing, and affordable housing, but delivering that has clearly been a challenge for a long time and we are seeing the consequences today,’ he pointed out.
With much talk of the Bank of England increasing interest rates as early as next month, Ishaan Malhi, chief executive officer of online mortgage broker Trussle, warned that lenders are already increasing their mortgage rates.
‘This will make securing a first mortgage that bit harder. If the Bank of England does decide to raise the base rate next month, it will have an immediate impact on those on a variable rate mortgage, who will see their monthly mortgage payments creep up,’ he explained.
