House prices reach and all time high
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House prices reached a new all-time high of £274,000 on average in August after surging by 11.7% year-on-year, according to official figures.
Growth in property values in London continued to outstrip the rest of the UK, with prices in the capital leaping by 19.6% year-on-year to stand at £514,000 typically in August, the Office for National Statistics data showed.
Average house prices in London pushed over the half a million pound mark for the first time in July.
Prices across the country jumped by 0.6% month on month in August, which was a weaker increase than a 1.6% monthly uplift recorded in July.
Many other reports covering developments in the housing market in recent weeks have pointed to the pace of house price growth softening, particularly in London following the capital’s strong run of increases.
These reports have suggested that speculation over interest rate rises, tougher mortgage lending conditions and potential buyers baulking at some of the prices being demanded by sellers are prompting the start of a calmer phase for the housing market in the coming months.
A first-time buyer typically faces paying 12.9% more for a home than they did a year ago, with the price of a starter home now standing at around £210,000, the ONS figures showed.
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Property values across England and Scotland are continuing to hit record highs, while those in Wales and Northern Ireland have still to catch up with the levels seen before the financial crisis struck.
Average house prices in England have increased by 12.2% year on year in England to reach £285,000, by 4.7% year,on,year in Wales to reach £172,000, by 6.7% in Scotland to reach £200,000 and by 9.6% in Northern Ireland to reach £143,000, according to the ONS data.
The regions where property prices have risen above their pre-financial crisis peaks to reach record levels are London, the South East, the East, the East Midlands, the West Midlands and the South West.
Every region has recorded price growth over the last year, from London’s 19.6% increase to a 3.8% uplift recorded in the North East, where average prices stand at £154,000.
Howard Archer, chief UK and European economist for IHS Global Insight, said that despite the latest “robust” figures from the ONS, house price growth is generally likely to become more restrained.
Toughened lending rules came into force in April under the Mortgage Market Review (MMR), which forces lenders to question mortgage applicants in more thorough detail about their spending habits, to make sure that they can truly afford their home loan.
Dr Archer said: “Even so, house prices do seem likely to keep rising over the coming months - with support coming from a relatively strong economy, high and rising employment, elevated consumer confidence, still relatively low interest rates and some pick-up in earnings growth in 2015.
“In addition, housing supply tightness will still likely be a factor supporting prices to some degree in a number of areas.”
Campbell Robb, chief executive of Shelter, said: “Ever-rising house prices mean more young people and families stuck in the ‘rent trap’ without a settled home of their own.”