House prices jump 6.8% in a year – ONS

Adam Williams
Written By:
Adam Williams

The UK housing market continued to grow at a rapid pace in January with house prices 6.8% higher than a year ago, ONS data has revealed.

The research found prices rose 5.5% between December and January alone.

All four nations recorded increases in house prices year-on-year with England up by 7.1% and Wales 6.9%. Property values also rose 2.7% in Northern Ireland and 1.4% in Scotland in the same period.

English house price growth continued to be skewed by London as the capital city recorded annual growth of 13.2% and the commuter areas of the South East increased by 7.1%.

Oliver Atkinson, director of the online estate agents Urban Sales and Lettings, said: “It’s important to remember that a national average house price figure can be highly misleading.

“In the North, especially, the market remains tough. Sellers are surprised when their properties don’t command the prices they think they will.

“When we carry out valuations in the North, they often come as a major reality check to sellers. The property market there is a different beast to the one that people are reading about in the papers.”

The arrival of the Help to Buy mortgage schemes may have helped mortgage availability but has had the adverse effect of pushing up first-time buyer house prices. The typical first-time property is now worth 7.6% more than a year ago.

Andy Knee, chief executive of LMS, said: “”The need for Help to Buy can clearly be seen as prices continue to rise and first-time buyers are required to pay more, with a 7.6% increase in the last year.

“It has been invaluable in enabling more and more first-time buyers to take their first step onto the property ladder but saving enough for a deposit is still a hugely daunting prospect for many. First-time buyers should also be aware that despite the number of mortgages with competitive rates on offer currently, a future rise in interest from the Bank of England could put monthly repayments well out of their comfort zone.”

Separate data released by the British Bankers’ Association found gross mortgage borrowing by banks reached £11.5bn in February, 47% higher than a year ago and the highest level since August 2008.

Since the beginning of the year net mortgage lending has started to rise as greater demand feeds through, it said.

Ashley Brown, director of independent mortgage broker Moneysprite, said: “Although mortgage activity cooled a little in January as expected, these figures show just how far the market has come in 12 months.

“Buyer confidence is back and encouragingly it’s first-time buyers who are driving the market again, aided by a reassuring arm around the shoulders from the Help to Buy scheme.

“That’s not to say it’s going to be smooth sailing for the rest of the year. The Mortgage Market Review is looming on the horizon and lending conditions are likely to get a little tougher.

“How much tougher no-one really knows, but stricter affordability rules may well put a brake on lending volumes.”