The data released today has shown that house prices are increasing strongly across most parts of the UK, with prices in London again showing the highest growth. House price annual inflation was 8.5% in England, 4.9% in Wales, 0.8% in Scotland and 0.3% in Northern Ireland.
Increases in Annual house prices across England were driven by rises in London (17.0%), the East (6.6%) and the South East (6.1%).
Excluding London and the South East, UK house prices increased by 4.7% in the 12 months to March 2014.
On a seasonally adjusted basis, average house prices fell by 0.5% between February and March 2014.
In March 2014, prices paid by first-time buyers were 10.0% higher on average than in March 2013. For owner-occupiers (existing owners), prices increased by 7.2% for the same period.
Brian Murphy, Head of Lending at Mortgage Advice Bureau (MAB), says that it’s welcome news that house price growth is slowing after some dizzying rises in recent months.
"These have undoubtedly been fuelled by the surge in the London property market. Putting the capital and South East to one side leaves us with a far more measured and controlled upwards trend. Annual growth of 4.7% will be welcome news to those who not so long ago were caught in an equity trap and the victims of a stagnant market.
There are signs that the upwards momentum in the housing market is cooling slightly. As for the mortgage market, with the new affordability rules keeping lenders under a tight rein, decisions to offer credit are being taken with clear heads and a full and honest appraisal of borrowers’ finances.
Public comments from the Governor of the Bank of England and the Prime Minister in the last 48 hours have made two vital points: firstly, that we need more homes to keep up with the demands of our growing population; and secondly, that Help to Buy is making a difference to aspiring homeowners across the country with very little role behind the flurry of activity in London and the South East.”
Richard Sexton, director of e.surv chartered surveyors, highlighted that buying a home is still becoming pricier, but the pace of increase is beginning to simmer which is helping ease the pressure on new buyers.
"London and the South East are clearly the exception rather than the rule, and removing them from the equation takes annual price rises to a more modest 4.7%.
The price-tag on a new home has increased the fastest for first-time buyers, who are already at a disadvantage without equity stored in bricks and mortar. Not only this, first-time buyers typically pay higher rates on their mortgages, as well as having the struggle of building a deposit. Help to Buy is keeping the mortgage market accessible despite these barriers and the number of first-time buyers actually hit a pre-recession high in March. But unless the stock of available homes is rapidly increased, there is a limit to how effective the scheme can be.
The government must do much more to support the supply side. It is vital that first-time buyers continue to be supported, and that we do not allow them to be priced out of the market. In order to safeguard the supply situation, we simply need to build more homes.”
David Newnes, director of Your Move and Reeds Rains confirmed that the housing market recovery is radiating out across the country, as prices and activity advance steadily across the regions. The capital is clearly a good market showing the strongest growth. But if we strip out London from the picture, average house prices have risen a sustainable 4.7% over the past year.
Household finances have seen an upturn in recent months; invigorated by healthy wage growth, low inflation and steady rents – which in fact are rising slower than CPI inflation. This has bolstered the hopes of aspiring buyers, enabling thousands to save up crucial deposits. First-time buyers continue to be the catalyst fuelling growth at the bottom rung of the ladder. Help to Buy may not be necessary in North London and Hampstead, but it’s certainly useful in Hull.
However lack of enough new available housing stock is still the primary roadblock to a full property market recovery. Construction may be ramping up the pace, but housebuilding starts are still trailing behind the required levels.
The mortgage market has already taken steps to regulate borrowing more closely, and criteria have tightened substantially again. We need to see the full impact of MMR yet but increased supply of new homes would also help to continue to moderate price rises, relieve competition for properties, and sustain activity levels.”
Peter Rollings, CEO at Marsh & Parsons, observed that the London property market continues to outshine the rest of the country, with house prices in the capital rising 17% in the year to March 2014.
"This growth is being sustained by unwavering demand among UK and international buyers alike, for whom Prime London property is practically a global reserve currency, offering unbeatable capital investment. The worldwide appeal and desirability of London as a city makes this a unique component part of the market, and it does not speak for the UK as a whole.
If you exclude London from the equation, average UK house prices have risen an orderly 4.7% in the last 12 months, and growth is still just awakening in many parts of the country.
The housing market is just that – a market, and by definition will self-regulate in time. We have seen a remarkably busy opening few months of the year, but price rises are steadying now thanks to a resurgence of supply and the recent Mortgage Market Review tightening affordability criteria.
The first signs of cooling are evident this morning, with average UK house prices down 0.5% from February to March 2014. Excellent capital growth is encouraging sellers and accidental landlords to cash in by put their properties up for sale and outside of London, Help to Buy is freeing up the market at the lower end – inside London, Help to Buy is virtually non-existent. This is going some way to redress the imbalance of supply and demand, and we have seen the ratio of buyers per available property fall from 24 buyers per property in January to around 18 at the end of April. However there are still around 50% fewer properties available than in 2007, so there is still plenty more slack to be taken up.”
