House prices surge to record high
10:25am Tuesday 18th February 2014 in © Press Association 2014
House prices have surged to another record high and now stand at one quarter of a million pounds on average, official figures show.
Property values rose by 5.5% across 2013 to reach £250,000 in December, with price growth "beginning to increase strongly across parts of the UK", the Office for National Statistics (ONS) said.
Price rises in London are still responsible for a "large part" of the upswing in values, the ONS said. London saw a 12.3% increase in house prices in the year to December pushing prices to £450,000 typically, which is one fifth (20.3%) higher than their pre-financial crisis peak in the capital in 2008.
The house price index across the UK surpassed a previous record high reached in November. On a monthly basis, prices rose by 0.9% between November and December.
Charity Shelter warned that the landmark figures are evidence that prices are "spiralling out of control".
The ONS data showed that in England, house prices rose by 5.7% over the year to reach £260,000 on average. In both Wales and Northern Ireland they are up by 4.8% annually.
The average house price in Wales is £167,000, while in Northern Ireland, which saw some particularly strong price falls after the economic downturn, values have climbed to £135,000 typically.
Meanwhile, Scotland has seen prices lift by 0.5% over 2013 to reach £182,000 on average.
The figures also show that the average first-time buyer is paying 7.4% more for a home than they were a year ago.
In December, the typical price paid by someone getting on the property ladder was £189,000.
Home-movers are paying 4.7% more than they were in December 2012. The average price paid by an existing home-owner has risen to £286,000.
Campbell Robb, Shelter's chief executive, said: "Yet again, the Government's own figures show that house prices are still spiralling out of control.
"Until we build enough homes to keep house prices stable, more young people and families desperate to put down roots will see a home of their own become a distant dream.
"Schemes like Help to Buy are only making the problem worse by inflating house prices further. To give the next generation a fighting chance, the Government needs to get serious about building more affordable homes now."
In England, the house price index for the South East and the East is now above its pre-financial crisis peak, by 1.9% and 1.4% respectively.
Prices in the South East have lifted to £306,000 on average, while in the East of England they are at £263,000 typically.
The ONS said that if London and the South East were taken out of the figures, UK house prices would have increased at a lower rate of 3.1% over the year to December to reach £195,000 on average.
The Government's flagship Help to Buy scheme, which was launched last year, has significantly widened the availability of mortgages for people with deposits as low as 5% and has helped to pave the way for more loans to be handed out to first-time buyers 2013 than in any other year since the economic downturn.
But some experts argue that, while the scheme has helped to boost the supply of potential home-buyers, more should be done to increase the supply of properties on the market, which could help to calm house prices in some areas.
Concerns have been raised that rising prices could be making some first-time buyers feel under pressure to jump on the property ladder, which could put them in danger of over-stretching their finances.
Housing Minister Kris Hopkins said : "These figures show that the housing market is in robust health, thanks to the Government's actions taken to keep interest rates down and our initiatives to help people get onto the housing ladder through schemes like Help to Buy and Right to Buy.
"We have kick-started house-building, with registrations of new-build homes the highest in London since records began 26 years ago, and the highest for seven years across England as a whole.
"Our affordable housing programme is investing almost £20 billion in homes for those on lower incomes too, to ensure all hard-working people benefit from the economic recovery."
Will Zimmern, senior economist, PwC, said he expects the London property market to continue to race ahead.
He said: "Looking ahead, our analysis suggests that the average UK house price could rise by 5.5% in 2014 and by 2020, could be under the hammer for over £335,000.
"We also expect the divergence between London and the rest of the UK to continue in the short-term - and by 2020, the average London property could be worth almost double the UK average."
Stephen Smith, director, mortgage club and housing, at Legal & General Mortgage Club, said London is set to become "unaffordable" for more ordinary families and would-be first-time buyers.
Mr Smith said: "The reality is, many may be forced to live in suburbs and further away from their work.
"However, the fact that UK wide house price inflation is only 3.1%, if London is excluded, shows there is a 'two speed' market...
"The wider picture in the UK shows a pretty orderly market with a modest rise and no housing bubble."