In the 12 months to September, average house prices increased 6.4% in England (up from 6.0% in the year to August 2015), 1.1% in Wales (up from 0.9%), 1.1% in Scotland (up from -0.6%) and 10.2% in Northern Ireland (up from 5.2%).
House price increases were driven by an annual increase in the East (8.4%) and the South East (7.4%). Excluding London and the South East, UK house prices increased by 5.0% in the 12 months to September 2015.
The report also found that the average price paid for a home by first-time buyers in the past year was 4.3% higher than a year earlier and stood at £216,000.
On a monthly basis, average house prices increased by 0.8% between August and September 2015, compared with an increase of 0.4% in average prices during the same period a year earlier.
In September, average house prices in 4 of the 9 English regions are at record levels. House prices in the North West, Yorkshire and The Humber, the East Midlands and the South East fell back slightly from the record levels witnessed in August 2015. The North East is the only English region yet to surpass its pre-economic downturn peak (prices in the North East remain 2.4% below the peak of January 2008).
Paul Smith, CEO at haart estate agents, comments: “Today’s data shows a strong house price growth trajectory with an annual increase of 6.1% for the UK as a whole, driven up by the East, the South East and Northern Ireland. The impact of price rises in the capital has demonstrably rippled out to the regions as people driven out of London due to affordability issues add to demand for property in the regions. The increasing divergence between demand and supply is the primary driver behind the house price growth trend. Our most recent data shows that while the number of new buyers has surged 8.4% in the last year, the supply of homes on the market has fallen 14.3% over the same time period. There are now 13 buyers chasing every property to come on to the market.
We predict that next year will see no real improvement in levels of property stock unless the government takes drastic action. Without a radical move, the core of the UK property market will continue to see house price increases of up to 10% in 2016. However, the top end of the property market, particularly in London, will see a price correction in 2016 because of the impact of stamp duty, consisting of a 10% drop in value for homes over £1 million.”
Richard Sexton, director of e.surv chartered surveyors, comments: “A benign lending environment is the antidote to first-time buyer’s challenges. Reassuringly, October recorded the highest total lending levels for seven years, meaning rising prices aren’t dissuading homebuyers. As prices continue to rise, the dream of owning a home can look further away than ever – but there is support available including the launch of next month’s Help to Buy ISA. With low inflation thought to be pushing back any interest rate changes, the future looks brighter for first-time buyers.
The East of the country, boosted by its location as a commuter haven, is now challenging even the capital’s house price growth. As the high prices of London persist, buyers are forced to look elsewhere. Strong employment hubs such as Cambridge are making the East an attractive alternative to Greater London and injecting a new energy into the area’s housing market."
Andrew Bridges, managing director of London estate agents Stirling Ackroyd, said: “London is leading the charge again. Property in the capital is in huge demand, and supply is caught in a decades-long crunch. The result is higher prices – and we’re now seeing a new wave of momentum in the London market, even as we approach the festive period.
Insufficient supply is playing a lead role in causing rising house price growth. But there is also a positive story – that so many millions of people from around the world want to live and work in this great city. The challenge is to make that London dream possible for a greater section of society, and that means allowing more new homes. London is facing a flood of aspiration and a crisis of opportunity – but nonetheless that crisis needs to be solved swiftly.”
Jeremy Duncombe, Director, Legal & General Mortgage Club, commented: “Property prices picked up in September following the more subdued increases seen during the summer months. Given the increase in demand, and that supply remains limited, we expect house price growth to climb further in the final quarter of the year. The scale of the disparity between house prices in different regions of the country illustrates the need to not only build more homes, but to also ensure that more properties are built of the right size and in the right places. The level of demand clearly varies by location and this is something the country should take into account when planning the construction of new properties. Ultimately, we need to bring supply in line with demand, not just on general terms but also specifically to each area."
Rishi Passi, CEO, Oblix Capital, added: “House prices continued their steep climb in September, driven up by constricted supply and fewer homeowners selling. Improving economic conditions, rising wages and postponed interest rate rise expectations are all also bringing more buyers to the market, stoking up demand and inflating prices in the lower end of the market. The good news is that rising prices in this band will attract further investment and provide opportunities for developers, especially SMEs and should lead to an increase in attention paid to providing houses for this underserved end of the market.”
