October 23 2014 Latest news:
Shaun Lowthorpe, Business editor
Tuesday, March 25, 2014
Fresh fears about “sky-high” house prices have been raised after official figures showed the average UK property value has lifted to another new peak of £254,000, with prices in the East of England now almost 3% above their pre-crisis high.
Whilst a large part of the national upsurge was driven by a 13.2% rise in London property values in the 12 months to January, prices are growing increasingly strongly across many parts of the UK, the Office for National Statistics (ONS) said.
Overall, house prices have risen by 6.8% annually, marking the fastest increase in three-and-a-half years, and they are 0.6% higher than record levels previously seen in December.
As activity lifts, the ONS figures show that the average price paid by a first-time buyer is now £190,000, which is 7.6% more than a year ago.
With a typical price tag of £458,000 in London, house prices in the capital are now nearly 23% higher than their 2008 pre-financial crisis peak, according to the ONS figures. Prices in the South East and the East of England are also sitting 5% and nearly 3% respectively above their pre-crisis highs.
England remains the only UK nation where property prices are higher than their pre-financial crisis peak. Prices in Northern Ireland are still 49% below their pre-crisis high, while for Scotland and Wales the figures are 6% and 4% respectively.
Over the last year, prices have grown by 7.1% in England to reach £264,000 typically, by 6.9% in Wales to around £166,000, by 2.7% in Northern Ireland to £132,000 on average and by 1.4% in Scotland to around £183,000.
William Zimmern, a senior economics consultant at PwC, said he expects the acceleration in property prices to continue into the spring.
PwC’s analysis suggests that by the end of the year, average UK property prices could edge up by another £10,000 to reach around £264,000 on average - and in London they could hit the half a million pound mark.
Mr Zimmern said: “Our research indicates there seems to be little evidence to suggest a house price bubble at the UK level.
“In Northern Ireland for instance, house prices have only just turned a corner having bottomed out in 2013 and have now risen for nine consecutive months.”
But he said the picture in London is “more mixed” and concern will grow if property prices continue to diverge from the rest of the UK.
Campbell Robb, chief executive of housing charity Shelter, said the figures are a “blow” to young people trying to get on the property ladder.
He said: “No matter how hard young people and families work or save, these days most simply can’t keep up with sky-high house prices, and are instead facing a lifetime of unstable renting.
“If we want to give the next generation a fighting chance, the Government has to get serious about building the affordable homes we need now.”