UK house prices increased by 8.4 per cent in the year to January 2015, although this was down from 9.8 per cent in the year to December 2014, according to the latest Office for National Statistics house price index.
Annual house price growth is beginning to show signs of slowing across the majority of the UK, with increases in England driven by an annual rise in London of 13 per cent and to a lesser extent increases in the east (9.9 per cent) and the south east (7.6 per cent).
However, excluding London and the south east, UK house prices increased by just 6.5 per cent in the 12 months to January and on a seasonally adjusted basis, average house prices fell by 0.2 per cent between December and January.
Earlier this month, LSL Property Services monthly house price index showed that house prices in England and Wales hit £273,528 last month, meaning they are now £34,192 higher than at the height of the housing boom in February 2008.
The data chimes with the latest Land Registry house price index, which showed that in January average house prices were just £2,000 less than the peak of the market.
Richard Sexton, director of E.surv chartered surveyors, said that an overall tempering in house price growth clouds a particularly competitive market.
“The bottom wave of the property market is riding on the crest of low mortgage rates, slashed stamp duty charges, and more higher LTV lending,” he stated, adding that the zero per cent inflation announcement yesterday (24 March) will push the prospect of an interest rate rise even further into the future, which may spur mortgage rates to fall even lower, stoking more demand from the bottom up.
“Potential buyers are coming in from all directions to buy into a constricted supply of property on the market, and time is ticking to build more homes.”
Adrian Gill, director of Your Move and Reeds Rains estate agents, said that after storming ahead of the rest of the country last year, conditions have calmed in London and the south east.
“The capital has already had the first taste of added pressure placed on prime property in the form of revised stamp duty, and the £1.5m to £5m slice of the market has also been hit by cold feet in the run up to the general election, with the threat of a potential mansion tax.
He also argued that while the housing shortage may be propping up property price growth, more needs to be done to invigorate the property market recovery.
“Measures like the Help to Buy scheme and reforming stamp duty have airlifted support to the bottom end of the market, but unless more new homes are built, the government are practically playing a zero-sum game: reshuffling a deck doesn’t leave you with more cards.”