MortgagesJul 19 2016

House prices up in May: ONS and Land Registry

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House prices up in May: ONS and Land Registry

Average UK house prices have increased by 8.1 per cent in the year to May, with a monthly increase of 1.1 per cent from April.

The new UK house price index - which replaces the previous house price indices separately published by the Land Registry and the Office for National Statistics - also revealed the average price was £211,230 in May; £16,000 more than last year.

The main contribution to the increase in UK house prices came from England, where house prices increased by 8.9 per cent over the year, with the average price in England now £227,000.

Wales saw house prices increase by 3.6 per cent over the latest 12 months to stand at £143,000.

In Scotland, the average price increased by 4 per cent to £141,000 and the average price in Northern Ireland was £118,000 in May.

London still has the highest average house price at £472,000 while the lowest average price continues to be in the north east, at £124,000.

The capital also showed the highest annual growth, with prices increasing by 13.6 per cent in the year to May, while again, the north east had the lowest annual growth, with prices up by 3.2 per cent over the year.

In Kensington and Chelsea the cost of an average house was £1.27m.

In contrast, the cheapest area to purchase a property was Burnley, where an average house cost £69,000.

The government’s economic commentary backing the latest statistics stated market activity in May was more subdued compared to the period before the April stamp duty tax increase on additional properties.

“The timing of the stamp duty tax seems to have cooled demand in recent months, but this follows an extended period of increases in activity,” it explained, adding that following a 6.2 per cent fall in April, the volume of lending approvals for house purchases recovered slightly, by 1.3 per cent in May.

“However, approvals on a monthly basis are still below the levels seen in the 10 months before the stamp duty changes,” it added.

Data from the Royal Institution of Chartered Surveyors also suggested that buyer demand fell for the second consecutive month in May, with the rate of contraction in demand the fastest since mid-2008.

Indicators of supply in the housing market were more mixed, the summary noted, citing Bank of England data for May reporting a shortage of newly built and secondary market housing supply.

Andrew Bridges, managing director of Stirling Ackroyd, commented that beyond a couple of months of volatility, the real drivers of UK property values have hardly changed.

He said: “Across the country there are still too few homes to match demand, and if anything the construction of new homes is now slowing – all further strengthening the long-term prospects for investors in the UK property market.”

peter.walker@ft.com