Published On: Tue, Nov 14th, 2017

UK house prices soar 5.4 per cent in a year with regions OUTSIDE London driving surge

Data released by the Office for National Statistics today showed the average UK house price rose to £226,000 in September, up £11,000 on a year earlier. 

It represents annual growth of 5.4 per cent and a 0.4 per cent increase from August, when the average house price stood at £225,956. 

Prices in England drove the surge, rising 5.7 per cent over the year compared to 3.1 per cent in Scotland and 5.3 per cent in Wales. Figures for Northern Ireland – which are calculated differently – showed growth of 3 per cent over the third quarter of the year.

The North West enjoyed the strongest rate of house price growth, up 7.3 per cent over the year to an average of £160,951, followed by the South West and East Midlands, up 6.6 per cent and 6.4 per cent at £252,737 and £184,399 respectively. 

The London housing market continued to cool – with prices in-fact falling 0.2 per cent between August and September and showing the slowest rate of annual growth across the UK at 2.5 per cent. With the average London home costing £483,568, however, the capital remains by far the most expensive place to live in the country.

Figures from UK Finance released today also showed, on a year-on-year basis, mortgage lending also increased in September – particularly remortgaging – suggesting homeowners rushed to secure low interest rates before the Bank of England hiked the base rate in November.

First-time buyers borrowed £5.1 billion in September, 4 per cent higher than in September 2016, while mortgages to second time buyers rose 6 per cent to £6.9 billion.

However, remortgage activity spiked most sharply – rising 16 per cent on a year ago to £6.4 billion. Buy-to-let lending increased by 4 per cent despite the withdrawal of tax incentives dampening growth in the market.

On a month-on-month basis lending fell across all segments of the market except remortgaging (which was unchanged), with mortgages to first time borrowers down 11 per cent, second homers 18 per cent and buy-to-let mortgages declining 9 per cent. 

However, this is typical of this time of the year, with August often one of the strongest months in the property market. 

Commenting on the data, UK Finances head of mortgage policy June Deasy said: “Lending slackened in September [compared to August], but it remained higher than a year ago. Remortgaging was particularly strong, with borrowers seeking to lock into historically low interest rates in advance of the widely anticipated rise in Bank base rate at the beginning of November.  

“Over the last year, the number of loans for remortgaging has been higher than in any period since 2009.  Low borrowing rates mean that mortgage repayments as a proportion of income remain at or close to their historic low point.

“While this ratio may edge upward in the coming months, monthly mortgage payments will remain affordable for the vast majority of borrowers.”

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