UK house prices jump 5.5% driven by London's booming property market

 

London house prices rose almost twice as fast as the UK average in the year to October, official figures show.

A 1.4 per cent month-on-month uplift took average UK house values to £247,000, surpassing a previous series peak set just two months earlier by 0.2 per cent, the Office for National Statistics (ONS) said.

London recorded a 12 per cent annual increase in property prices, pushing the typical house value there to £437,000. Prices in London are nearly 17 per cent higher than their pre-financial crisis levels, while those in the South East and the East of England are now sitting around 1 per cent higher than their previous 2008 highs.

The ONS figures showed that prices rose in every UK region year-on-year as the housing market continued to pick up pace. As London continued to race ahead of the rest of the UK, Yorkshire and the Humber recorded the smallest annual increase, with a 0.8 per cent annual uplift taking average prices there to £167,000.

A house in London is now typically worth almost three times one in the North East, which has the lowest average house prices at £148,000.

On a year-on-year basis, prices in England lifted by 5.7 per cent to reach £257,000 on average, by 2 per cent in Wales to £164,000 and by 3.3 per cent in Scotland to £184,000.

Northern Ireland, which has previously endured year-on-year falls in house prices of around 10 per cent as the economic downturn took hold, recorded a 4.8% annual increase in prices in October.

But despite prices in Northern Ireland having returned to an upward path in recent months, at £129,000 on average, prices there are still 50% below their 2007 peak.

England remains the only UK country where property prices are above their pre-crisis high and prices in both Scotland and Wales are still around 6% below their 2008 peak levels.

Fears of a looming house price bubble have been growing in recent months as a flurry of would-be home-buyers has entered the market following Government schemes such as Funding for Lending and Help to Buy which have widened mortgage availability.

Funding for Lending gives lenders access to cheap finance on condition they pass on the benefits of this to borrowers, while Help to Buy gives aspiring home- buyers with deposits as low as 5% a helping hand on to or up the property ladder.

But analysts have warned that the supply of homes on the market is not enough to keep up with demand, which is putting upward pressure on prices as the market heats up.

The Bank of England recently took the first step in applying the brakes to the property market by announcing that it is refocusing Funding for Lending away from mortgages and towards helping small businesses borrow. Some experts have warned that this could spell the beginning of the end for ultra-low mortgage rates.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens."

Howard Archer, chief UK and European economist for IHS Global Insight, said the "sharp acceleration" in prices in the ONS figures would fuel concerns of a bubble.

He said: "There is a very real risk that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme which was launched in October.

"Consequently, the decision of the Bank of England and the Treasury to end Funding for Lending support for lending to households from January looks a highly sensible decision."

AP

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?