UK house prices increase by 2.6%

Key points from Office of National Statistics House Price Index

• In the 12 months to April 2013 UK house prices increased by 2.6%, down from a 2.7% increase in the 12 months to March 2013.
• House price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average.
• The year-on-year increase reflected growth of 2.8% in England and 6.2% in Wales, which were offset by declines of 1.2% in Scotland and 0.8% in Northern Ireland.
• Annual house price increases in England were driven by a 6.0% rise in London and a 3.6% increase in the East Midlands.
• Excluding London and the South East, UK house prices increased by 1.4% in the 12 months to April 2013.
• On a seasonally adjusted basis, UK house prices increased by 0.4% between March and April 2013.
• In April 2013, prices paid by first-time buyers were 4.7% higher on average than in April 2012. For owner-occupiers (existing owners) prices increased by 1.9% for the same period.

Average house prices in countries and regions

Average mix-adjusted house prices in April 2013 stood at £247,000 in England, £162,000 in Wales, £127,000 in Northern Ireland and £177,000 in Scotland.

In April 2013, London continues to be the English region with the highest average house price at £414,000. The North East had the lowest average house price at £143,000. London, the South East and the East of England all had prices higher than the UK average price of £238,000.

House Price Index by type of buyer

The average price for properties bought by first-time buyers increased by 4.7% over the year to April 2013, up from an increase of 1.3% in March 2013. During April 2013 the average price paid for a house by a first-time buyer was £179,000.

The average price for properties bought by former owner-occupiers (existing owners) increased by 1.9% in the year to April 2013, down from an increase of 3.2% in March 2013. In April 2013, the average price paid for a house by a former owner-occupier was £273,000.

House Price Index by new and pre-owned dwellings

During the year to April 2013 prices paid for new dwellings increased by 4.4% on average, compared with an increase of 1.0% in the year to March 2013. The average UK house price for new dwellings in April 2013 was £234,000.

During the year to April 2013 prices paid for pre-owned dwellings increased by 2.5% on average, compared with an increase of 2.8% in the year to March 2013. The average UK house price for pre-owned dwellings in April 2013 was £238,000.

Regional all dwellings annual house price rates of change

12 month percentage change for April 2013

Average UK house price goes past £250,000

The national average asking price of a property coming to market is over a quarter of a million pounds for the first time. 
The new record was achieved as prices rose 1.2% (+£2,957) in June, the sixth consecutive monthly rise this year. While London sets another new record of £515,243, continuing its upward trajectory, the biggest winner is the South East which sees a record price of £329,968 as a result of a whopping 14.8% increase over the first six months of 2013.

There is also early evidence of a wider recovery as asking prices in the north (North, North West, Yorks & Humber, East Midlands, West Midlands, and Wales) rose by 9.2% , almost keeping pace with the 10.6% seen in the south (Greater London, South East, South West and East Anglia) over the first half of the year.

 Given asking prices reflect the aspirations of both sellers and local estate agents they are a leading measure of market confidence. These increases, along with reports from agents and developers of a pick-up in transactions, suggest a wider and more sustainable recovery as the price buoyancy of the London market shows signs of spreading across the country.

Miles Shipside, director and housing market analyst at Rightmove comments: “While this month sees several new price records, it’s the South East that has really started to lift-off. On top of that, the first half of 2013 saw little sign of the traditional north-south divide with the first-half asking price surge in the north almost equal to that of the south. The good news is that this indicates a wider upturn, albeit at historically low but increasing volumes. 

The bad news for would be buyers is that it has helped propel the average price of a property coming to market through the quarter of a million quid milestone for the first time. It is worth remembering that while the asking price and the eventual sale price may differ by a small margin, the asking price is a very strong indicator of perceived market value and direction.  It will take account of local supply and demand, as well as wider economic forces such as interest rates and consumer confidence.”

The national average asking price of a property coming to market is £252,798, beating the previous record of £249,841 set in May.

 Property market recoveries are traditionally led by London and, belatedly, the trend set in the capital now appears to be spreading as a broader housing market recovery is potentially on the cards. In price terms, this is the strongest start to a year since 2004, with both the south and north playing their parts with increases of 10.6% and 9.2% respectively.

 Unusually, London’s 10.9% (+£50,845) jump year to date has been surpassed by two northern regions; the North region at 11.0% (+£15,134) and the West Midlands at 11.3% (+£19,665). The South East is, however, the main beneficiary of the London boom, with the ripple effect contributing to a 14.8% (+£42,548) hike in the first six months of 2013.

Shipside observes: “London’s new sellers are asking an average of 30% more than they were four years ago compared to those in the South East who are asking less than 15% more. Although the South East has lagged behind the capital in recent years it is the biggest winner so far this year as, frankly, it has become ‘under-priced’. It offers real comparative value for buyers needing access to London but with housing needs or aspirations that leave them priced out of London itself. While some northern regions outpaced London this year, the price gap remains daunting for those looking to up sticks and head to the bright but dazzlingly expensive lights of the capital. The average price of a property in London is still more than three times higher than in the north.”

House Prices remain "overvalued" in the UK

House Prices remain overvalued and current price rises are only due to lack of supply in London and the South East.

That is the view of respected economic commentator Jeremy Warner, assistant editor of the Daily Telegraph.

Writing in the paper today, he said: "Despite a real-terms fall of around 25pc since the start of the crisis, UK house prices continue to look overvalued in terms of their historic relationship with disposable incomes. Remember that incomes have been falling too in real terms, so the ratio of prices to income hasn't changed as much as inflation-adjusted prices.

As everyone knows, the prime reason for sky high house prices is lack of supply, particularly in London and the South East, but a second reason is our old friend QE, which, as in other markets, is creating major distortions. Cheap money allows households to support much higher debt than otherwise, and has therefore put something of a floor under house prices.

By subsidising mortgages, the Funding for Lending and Help to Buy schemes will further support prices while doing little to improve supply. Upward pressure on house prices is therefore likely to continue as buyers return, threatening an eventual rerun of some of the causes of the original credit crisis. The point at which things turn ugly again depends on how quickly the Bank of England removes support. Central banks think they can engineer a soft landing. They hope for a Goldilocks outcome – not too hot and not too cold – where they can slowly wind down the printing press while keeping the recovery alive. Everyone else has got their doubts.

As for second homes in Europe, there is little cause for optimism on that front. The fall in house prices in the major areas of British ownership – Spain, Portugal, Greece, France and Italy – is far from over. British interest in buying overseas has also soured as a result of a relatively weak pound.

I'm sounding a bit like a broken record here, because the outlook for sterling also depends on QE. The policy goal of rebalancing the British economy away from debt-fuelled private and government consumption to exports and investment requires a low pound, and if it is true that the Bank of England's incoming governor, Mark Carney, is of the "print, baby, print" school, we can expect the pound to go lower still. Still, at least that would help prolong the party in UK asset prices a while longer."

Full article http://www.telegraph.co.uk/finance/personalfinance/investing/10119315/Jeremy-Warner-predicts-house-prices-stock-markets-and-the-pound.html

UK house prices up as supply falls

Thu, 13 Jun 13

The UK’s supply of property for sale dropped 8 per cent in May 2013 compared to May 2012. 

Combined with rising demand, the low levels of housing stock pushed up asking prices in the UK up by 0.6 per cent in May 2013 to £240,238, 3.6 per cent higher than last year.

Indeed, the mix adjusted average asking price has now grown for 19 months in a row in both England and Wales, with Greater London, the South East and the South West recording the biggest rises of 7.9 per cent, 4.4 per cent and 3.9 per cent respectively.

On the surface, an annual price rise of 3.6% appears to be a reasonably strong performance, although it is important to note that virtually all of this growth has been achieved in 2013 and predominantly in London and the South, explains the report.

Looking at price trends around the country, the recovery is only clearly apparent in the South. Average prices across the northern regions of England are essentially static (slightly negative in the case of the North West) in stark contrast with the South which has recorded monthly increases of 0.8%.

Active buyers are chasing ever fewer properties as supply continues to fall. The volume of new stock on the market has now fallen for six consecutive months and, in May 2013, the number of properties was down 8% on May 2012. In addition, a reduction in the typical marketing time for unsold property (currently 104 days, five days less than June last year) has further reduced the total volume of on-market properties, which is down 14% in the last 12 months.

While average house prices continue to recover, vendors seemingly remain cautious about entering the market in any significant volume. For many, bricks and mortar constitute one of the safest investments in today’s uncertain economic climate. The flow of properties into the sales market continues to fall and this has helped to push the total on-market stock is down by 14% vs. June 2012. As buyer confidence gradually improves in line with mortgage availability and economic growth, this restriction in supply will only intensify the competition for property. This is reflected in falling marketing times in areas of the country where demand is higher, and implies that the current stock is beginning to flow through the market at a faster pace.

“The current trends are clearly showing an overall market shift in favour of vendors,” comments Doug Shephard, Director of Home.co.uk. “Prices continue to recover and restricted supply is encouraging more competition between buyers. However, many potential vendors are still reluctant to sell. Relatively cheap mortgages, strong demand in the rental sector and rising values make property an attractive and secure investment, especially in high demand areas which attract relatively high rents and benefit from appreciating capital values.  Until other investment options (shares, bonds, commodities etc.) can offer a premium over and above the yields available in property, the supply shortage will continue, and perhaps worsen.

“As always, the relative strengths of supply and demand will determine the rate of recovery of each local market. Given the current North-South divide, it is already obvious that the turnaround of each area of the UK will differ considerably. London, at one extreme, appears to be operating as a separate entity, bloated by BoE stimulus money and foreign buyers, seemingly immune to the overall economic conditions affecting the rest of the UK. In contrast, Wales and the North East continue to struggle with subdued price performance and typical marketing times that are over 60% longer than the national average.”