Jonathan Hudson comments in the Daily Express

By Hudsons | 17th Sep 2014 | Blog | Property News

House prices soaring as average home now valued at £272k

UK HOUSE prices recorded their highest annual rise in seven years last month as they surpassed their pre-financial crisis peak, official figures show.

By: Sarah O’Grady

Published: Wed, September 17, 2014

The cost of the average home is now £272,000 – a record high – after price inflation accelerated in the year to July by 11.7 per cent, adding £27,000 to the 2013 value.

Prices for first-time buyers soared even higher at 13.5 per cent over the year leaving those looking to buy their first home now needing £209,000.

Typical values of property in London exceeded £500,000 for the first time to reach £514,000, up from £499,000 a month earlier and despite year-on-year growth in the capital easing to 19.1 per cent in July, from 19.3 per cent in June.

And Scotland, the East Midlands, the West Midlands and the South West joined London, the East and the South East in having price levels higher than before the global downturn struck in 2007/08, according to the Office for National Statistics, whose figures are based on mortgage completions

Richard Snook, senior economist at PwC, said: “This latest data suggests a renewed acceleration in the UK housing market with price growth for the year as a whole to come in towards the upper end of our projected range of between six and 10 per cent.”

House prices across England – excluding London and the South East – grew by 7.9 per cent to hit an average of £206,000. Including the capital and the region, they hit £284,000.

This is just ahead of Wales, where prices increased by 7.4 per cent and Scotland which saw 7.6 per cent growth. House prices in Northern Ireland meanwhile increased by just 4.5 per cent.

In Wales the cost of the typical home is £171,000, £139,000 in Northern Ireland and £198,000 in Scotland.

Jonathan Hudson, of West End Estate Agent Hudson’s Property, London, said: “The whole of the UK has benefitted from the London ripple effect and this is shown in these figures.

“Annually the numbers are impressive, but a lot will depend on the economic performance of the London property market over the coming months, particularly how a yes vote to Scottish independence tomorrow might affect buyers’ confidence both nationally and globally.”

Regionally, the North East had the lowest average house price at £156,000.

David Newnes, director of Reeds Rains and Your Move estate agents, added: “Peeling back the regional layers gives a much more informed view of the core reality of the current market.

“It is critical that the underlying momentum, created by London, which has stimulated much needed increased volume in the rest of the market is allowed freedom to keep moving.

“Further afield, it is critical that support mechanisms like Help to Buy aren’t dismantled. Compared to the nadir of 2008-2012, activity in the housing market has improved, but is not completely out of the woods yet, and still needs to recapture some of the vitality of its pre-recession health.”

Figures released by the Council of Mortgage Lenders last week showed that the number of mortgages handed out to first-time buyers passed 30,000 in July, marking the first time this has happened during a one-month period since August 2007.

But first-time buyers are typically having to borrow record amounts to get on the property ladder, with the average size of a new loan taken out by this sector standing at £127,500 in July, according to the CML’s figures.

Andy Knee, chief executive of LMS, added: “Pressure on first-time buyers is not diminishing. In July, first-time buyers paid an average £374,000 in London, and £201,000 in the UK – up 13.5 per cent on last year.

“With evidence that first-time buyers are paying more and more for property, an interest rate rise now anticipated for Spring next year will bring affordability into the spotlight again and, for many, will add greater pressure to household finances.

“It’s unsurprising that recent findings from Shelter show parents are risking their own financial futures to reduce the burden and help their children on to the property ladder.

“Failure to address the critical housing shortage only adds to this and needs to be countered if first-time buyers want to stand a realistic chance of stepping onto the property ladder.”

Mark Littlewood, director general at the Institute of Economic Affairs, agreed. He said: “For more than three decades the UK has been building fewer new homes per head than any major country in Europe.

“Residential floorspace per household is now the lowest in Western Europe. These stark figures reveal just how hard life is for many families. It is more urgent that ever that we start to expand our meagre supply of housing.”

There have been some signs that toughened mortgage rules, which came into force in April under the Mortgage Market Review and force lenders to ask more questions about a mortgage applicant’s spending habits, have slowed down the house sale process.

But figures released by property analysts Rightmove at the beginning of the weeks showed how Britain’s housing market powered through the traditional summer slowdown with no loss of steam.

Asking prices jumped £2,474 to £264,875 across England and Wales – the first time since 2011 that asking prices have increased at this time of year.

And instead of usual summer fall of around 0.5 per cent in September, the month saw a 0.9 per cent rise.

Read the full article here.

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