Property prices on the increase

House prices have recorded their strongest monthly rise since July (PA)

House prices have recorded their strongest monthly rise since July, official figures showed today.

Prices in England and Wales rose by a "surprising" 1.1% in January to average £161,545, with monthly rises recorded for every region except the North West, according to Land Registry sales figures.

London, which has had strong overseas buyer interest, recorded a 2.5% monthly house price increase to reach £351,305, the biggest increase of the regions.

At the other end of the scale North West saw house prices fall by 2.1% to average £109,866.

The North East saw the second biggest month-on-month increase, with a 2.2% rise, but recorded the biggest year-on-year fall at 4.5% to reach £102,066.

Analysts have suggested that property prices have held up due to sellers' reluctance to put their homes on the market as a result of the weak economy, leading to "pent up" demand from buyers.

Lenders and estate agents have also reported an early spring boost caused by increased first-time buyer activity in the rush to beat the end of the stamp duty holiday for this sector of the market, which ends next month.

Ed Stansfield, chief property economist at Capital Economics, described the general house price increases as "surprising".

However he cautioned: "Today's data does little to alter the bigger picture that outside the capital at least, house prices are broadly stagnant in the South, but continue to edge gradually lower in the Midlands and across northern England.

"And with the data also suggesting that sales were little changed, at roughly half their pre-recession highs, the bigger picture still seems to be one of a very weak market."

The West Midlands recorded the lowest monthly increase, at 0.1%, to average £128,803, while prices rose by 0.2% in the East Midlands, to reach £123,142. Prices in Wales rose by 0.9% to reach £177,078.

Ray Boulger, of John Charcol mortgage adviser, said that he had seen increased activity in the market this year, not just from first-time buyers.

He said the widened availability of higher loan-to-value mortgages and the relative stability of house prices had helped to encourage the market.

"Activity levels look like being better than we had anticipated," he said. "There clearly is pent up demand."

The latest figures show that during November last year house sales generally increased by 3% to 57,967 compared with the same month in 2010.

The number of properties sold for more than £1 million in November 2011 decreased by 4% from 524 to 528 in November 2010.

PA