Average house prices in the UK increased by 5.2 per cent in the year to December 2017, according to the latest house price index from the Office of National Statistics.
This is an increase on the 5 per cent growth rate recorded the month before. The ONS said, that despite this uptick, the annual growth rate for house prices has slowed since mid-2016 – but remained broadly around 5 per cent during 2017.
This 5.2 per cent increase means that the average house in the UK was priced at £227,000 in December 2017, a £16,000 increase on December 2016, and £1,000 higher than the previous month.
Looking at the country split within the UK, the ONS said that house prices rose by an average of 5 per cent in England over 2017. The average property in England now stands at £244,000.
In contrast, house prices increased by 5.4 per cent in Wales, with the average property in the region costing £154,000. In Scotland the average property increased in value by 7.7 per cent over the year to stand at £149,000.
Figures are calculated slightly differently in Northern Ireland, but show a 4.3 per cent increase over the year to Quarter 4 (October to December). The average property in the region now stands at £130,000.
On a regional basis London continued to be the English region with the most expensive property prices; the average property in the capital now costs £484,000. This was followed by the South East (£322,000) and the East of England (£290,000). The lowest average price continued to be in the North East, at £131,000.
However, the gap between London and the rest of the English regions is narrowing, with prices in the capital growing at the slowest rate during 2017.
The ONS figures show house prices in London grew by just 2.5 per cent over the year to December 2017.
This compares to house prices growth in the South West of 7.5 per cent. This is the English region with the highest house price growth during 2017.
This was followed by house price increases of 6.3 per cent in both the East and West Midlands, and a 5.9 per cent increase to property prices in the North West.
Property prices grew by 4.2 per cent in the South East, and 3.6 per cent in the North East.
Like London, Yorkshire and The Humber also experienced relatively slow house price growth, with property prices rising by just 2.8 per cent over the year.
Looking at individual districts, the ONS HPI showed prices in the Orkney Islands enjoyed the most buoyant growth, increasing by 18.2 per cent in the year to December 2017. The average price of property in this area is £146,842.
Other districts with strong price growth included Cambridge (15.7 per cent) Eden (15 per cent) West Dunbartonshire (14.9 per cent ) and Kettering, Northants (14 per cent).
Weakest growth was in the borough of Kensington & Chelsea in London where prices fell over the year by 10.7 per cent. Prices also fell in City of London, Guildford and Hambleton.
Despite these price falls, Kensington & Chelsea remained the most expensive area of the UK to buy property, with the average dwelling costing £1.2m.
At the other end of the scale, Burnley remained the cheapest area to buy, with the average house costing just £78,000.
Private Finance director Shaun Church says these figures show that “affordability issues stubbornly remain”.
He adds: “Large regional variances also remains, and despite house prices slowing in some London boroughs the affordability gap between the capital and the rest of the country remains vast.
“However, the industry remains hopeful that the Government’s promise of greater house-building and therefore improved affordability will start to be realised in 2018.”
Garrington Property Finders managing director Jonathan Hopper adds: “The solid end to 2017 laid the groundwork for a brisk start to 2018.
“Two key catalysts have injected momentum into what is steadily becoming a more free-flowing market: December’s subtle improvement in sentiment around Britain’s economic prospects and the fear that interest rate rises will end the ear of cheap finance sooner than expected.”
He said that as a result market dynamics in the housing market have shifted. “Whereas in 2017 constrained demand allowed the limited number of buyers to make all the running, this year the pendulum appears to be swinging back to create a more balanced market.
“Crucially the experience of 2017 has forced many sellers to adjust their price expectations. The days of kite-flying are over, and the homes coming onto the market now tend to be more sensibly priced.”