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UK house prices ‘on the highway to recovery’

UK house prices increased by 6.8% in January 2014 compared with a year earlier, up from 5.5% in December 2013 according to the latest ONS figures.

House prices grew by 7.1% in England, 6.9% in Wales, 1.4% in Scotland and 2.7% in Northern Ireland.

House price growth is increasing strongly across some parts of the UK, with prices in London again showing the highest growth.

Annual house price increases in England were driven by rises in London (13.2%), the South East (7.1%) and the West Midlands (5.3%).

Excluding London and the South East, UK house prices increased by 3.8% in the 12 months to January 2014.

On a seasonally adjusted basis, average house prices increased by 0.6% between December 2013 and January 2014.

In January 2014, prices paid by first-time buyers were 7.6% higher on average than in January 2013. For owner-occupiers (existing owners), prices increased by 6.5% for the same period.

David Newnes, director of Your Move and Reeds Rains, part of LSL Property Services plc commented:

“The property market is rolling ahead on the highway to recovery.  Momentum is growing as lending has increased substantially in the last year – largely thanks to the combination of consumer confidence, an array of attractive mortgage deals and a real willingness on the part of banks to lend to borrowers with smaller deposits.  Pricing is being driven by greater lending availability, positive consumer sentiment as the jobs market continues to improve along with the wider economy. Cheaper rates and increased high LTV lending has encouraged more first-time buyers to invest in property.

“It is welcome news to hear that the vast majority of people using the Government’s HTB schemes are first-time buyers and those outside London, which is playing a significant part in boosting demand across the country.  With this in mind, it’s encouraging to hear that Help to Buy will be extended to help strengthen long term growth in the property market as well as support the construction sector.  Rising demand for housing must be matched with rising supply if the Government is to bring the cost of housing within the reach of first-time buyers. In the context of the cost-of-living crisis which has been central in the latest Budget, building more homes is key so that there is less competition over available property. It’s important to ensure price rises move forward at a steady rate to allow the property market to stay healthy at all levels.”

Peter Rollings, CEO at Marsh & Parsons, said:  “The UK property market is blossoming into spring, with house prices up 6.8% in the year to January 2014. The average UK house price has now surpassed £250,000, placing the bulk of transactions within the 3% stamp duty tax band – and providing yet more ammunition for critics who believe the Chancellor played a bad hand by not reforming stamp duty thresholds in last week’s budget.

“The London property market is still soaring ahead, with a 13.2% annual house price increase which dwarfs that in the rest of the UK.  The average property price in the capital is now over three times that in the North East.  Unwavering demand from UK and overseas buyers is a key ingredient behind this rate of growth, and Prime London property continues to be a Mecca for property investment. And with pensioners now freed from the shackles of annuity, the buy-to-let market could become a Holy Grail for retirement, offering unrivalled tax-efficient investment.”

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