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October of 2013 saw a shockingly high average property value estimation from the Office of National Statistics; it says that house prices have risen 3.8% in a year to reach a record high of £247,000 – well past the previous market peak of January 2008. The ONS’ monthly study showed that house prices were on the increase in all regions of the UK, apart from Scotland. Prices rose in England by 4.1%, in Wales by 1%, in Northern Ireland by 1.1% and shrank by 0.7% north of the border. The latest stats also found that first-time buyers are paying 4.9% more for a home, compared to at the same time last year.
Like most house price surveys that take London into the equation, the average is skewed by the capital; strip out London and property inflation was put at a much more modest figure of 2.1%. The ONS figures valued the average property in the capital at £437,000, which represented a rise of 8.7% in the last 12 months. The cheapest houses were in the north east, priced at £149,000, but these have still gone up 2.2% over a year. Other regions that have experienced healthy growth over the last 12 months include the East and West Midlands at 3.8% and 3.5% respectively.
With the launch of the second stage of Help to Buy there is concern that another property bubble may be on its way with borrowers overstretching themselves. The first stage of the scheme gives interest-free five year loans to buyers of new-build homes – affecting only a limited area of the housing market. Stage two of Help to Buy underwrites 5% deposit mortgages across the whole property market on homes up to a value of £600,000.
Whatever happens in the coming months, it is clear that the ONS are way off the mark with the house price indices produced by the big mortgage lenders. Halifax and Nationwide show property prices currently standing at around £170,000. The ONS data also shows a 13% growth in two years; £218,000 in August 2011 to £247,000 in August 2013. That’s another statistic that you wouldn’t see in any other house price survey.
Sources: thisismoney.co.uk, ons.gov.uk (image courtesy of telegraph.co.uk)
