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.
Peter Rollings, CEO at Marsh & Parsons, confirms that 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.”
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), suggested that the news that house prices received an annual boost of 6.8% in January will leave some concerned that we’re heading towards a house price bubble.
"Take away London and South East from the equation, and prices have increased by a far more sensible margin of 3.8% in the 12 months to January 2014. The property market in London has always run by its own rules and is not representative of the country as a whole, so excluding this region from house price calculations gives us a far better idea of what consumers can expect to pay for a home.
It’s crucial to remember that prices are rising from record lows brought on by the recession. Price rises are finally providing more equity for second-steppers looking to move up a rung in the property ladder. Improving house prices also boost both consumer and lending confidence and this is reflected in the 50% annual increase in mortgage lending reported by the BBA.
With first-time buyers now paying 7.6% more on average for their first home, it is vital that they are now able to access higher loan to value (LTV) mortgages and put down less of a deposit thanks to government schemes such as Help to Buy. However, we must keep prices affordable for first-time buyers by ensuring the construction of new properties catches up with improved demand.”
Richard Sexton, director of e.surv chartered surveyors, thinks that the housing market is 'sparking with energy'.
"Prices have increased in every region of the UK ignited by a renewed confidence in the economy. Buyers are taking advantage of low rates on offer to get on the housing ladder. And more buyers are choosing to buy now in anticipation of further price rises in the imminent future.
Help to Buy is propelling many people who would have been left renting onto the housing ladder, meaning first-time buyers are at the forefront of the recovery. It has allowed more lending to borrowers with smaller deposits and this has eased the struggle to save while interest rates – and wages – remain low. High LTV lending still has some ground to make up; it is still a quarter behind what it was in 2008. But the extension of Help to Buy 1 announced in the Budget will see first-time buyers supported until the end of the decade. If this comes hand-in-hand with more home-building, the number of first-time buyers will continue climbing for the foreseeable future.”
Lucy Hodge, Director of Vantage Finance confirmed that house prices are still on the rise, and we’re seeing a huge amount of activity by investors keen to take on more projects as stock continues to fly.
"That said, it’s also becoming harder for property investors to secure deals and in recent months we’ve noticed a growing number re-thinking their strategies or looking in different geographical areas. The challenges are particularly noticeable in auction situations in certain London postcodes, where it's incredibly hard to succeed. As a result, we’ve seen short terms loans grow in popularity among investors who want to boost their chances of success in a fast moving market.
Now more than ever, investor clients will be looking to brokers to support them with robust solutions and sound guidance. The opportunities out there for investors are huge, and brokers who can help their clients to act quickly and sensibly will reap the benefits.”
Karen Bennett, Sales and Marketing Director, Commercial Mortgages, Shawbrook Bank feels that the rise in prices indicated by the ONS certainly doesn’t come as a surprise, given the consistently upward trend we’ve witnessed over recent months.
"Inevitably there will be some who greet the news with trepidation, but a burst bubble is by no means a foregone conclusion. Provided that property investors, brokers and lenders conduct themselves with an eye to the future – in the full knowledge that base rates will not remain this low for ever – we don’t need to fear what’s ahead. Sensibly geared portfolios and a savvy approach to location will allow brokers and their investor clients to make the most of the current property climate, and will stand them in good stead if prices do level out in the not too distant future.”
David Newnes, director of Your Move and Reeds Rains says that 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.”
