UK average house prices increased by 5.2 per cent over the year to August, unchanged from the year to July, meaning the average UK mix-adjusted house price was £284,000.
Office for National Statistics data also showed that on a seasonally adjusted basis, average house prices increased by 0.7 per cent between July and August.
Prices paid by first-time buyers were 3.8 per cent higher on average than in August 2014, while for owner-occupiers, prices increased by 5.8 per cent for the same period.
The figured also revealed that house price annual inflation was 5.6 per cent in England, 2.9 per cent in Northern Ireland, 0.8 per cent in Wales and -0.9 per cent in Scotland.
Annual house price increases in England were driven by an annual increase in the east (8.8 per cent) and the south east (7.4 per cent).
Excluding London and the south east, UK house prices increased by 4.8 per cent in the 12 months to August.
In terms of the economic context, the ONS stated that while the annual rate of growth remains the joint lowest since September 2013, an ongoing shortage of supply, combined with strengthening demand, suggests upward pressure on house prices remains.
The ONS construction industry output release for August reported a 5.8 per cent fall in new housing construction in the year to August, the largest contraction in 29 months. In the secondary market, the Bank of England’s agents’ summary for August reported that weak activity could be self-perpetuating, as potential vendors remain reluctant to put their homes on the market without suitable properties available for purchase.
While supply remains tight, demand for house purchases continues to grow – as highlighted in the BOE’s August inflation report.
Paul Smith, chief executive at Haart estate agents, commented that they are currently seeing a back-log in the supply of new homes and the mix of stock out there is not fulfilling the needs of the population.
“If people see that it may actually be disadvantageous to hold out on selling-up and moving on in the hope that house prices will increase further, we may see more homes suitable for first-time buyers coming onto the market.”
The ONS also gave an update on progress developing of a single, official house price index.
Since the summer, there have been delays in securing access to the data required to begin test production of the new index, however work is still progressing. An article on the new methodology will be published in late November.
Further details regarding the transition plan will be published in early 2016, including a number of user events to fully explain the changes ahead of the anticipated first publication of the new index by June 2016.