House prices rose by 4.9 per cent year-on-year in January, although average prices were down on the month before, according to the latest data from the Office of National Statistics.
Headline figures show that prices fell by 0.3 per cent from December. This gives an average property price of £225,621.
The average price paid by a first time buyer was £189,859 – an increase of 4.6 per cent, year-on-year.
This is the latest property index to take the temperature of the housing market. As other key indices have found, it paints a mixed picture with regional variation and a lack of supply.
In Scotland prices rose by a more buoyant 7.3 per cent over the year to January 2018, while in Wales prices rose by 4.5 per cent. In Northern Ireland prices increased by 4.3 per cent over the year to quarter four (October to December 2017).
When looking at house prices over a five year period, property prices across the UK have fallen, This has been driven by price falls in England and Northern Ireland. However over this five year period prices have risen in both Scotland and Wales.
There is also considerable variation in the price changes to different property types: detached houses have seen the biggest rise: up by 5 per cent year-one-year. In contrast there has only been a 4 per cent increase in the price of flats and maisonettes.
There was a significant increase in the price of new build property, rising 14.2 per cent year on year.
Many property experts have pointed to Government schemes, such as Help to Buy fuelling price inflation in this sector.
The ONS figures also show sales volumes have fallen across the UK. In England they are down 13 per cent, in Wales down 5.2 per cent, but Scotland has seen a more modest fall of 1.9 per cent. Again Northern Ireland’s figures are calculated on a slightly different basis but show a decline in sales volumes of 8.8 per cent between the fourth quarter 2016 and the fourth quarter 2018.
Landbay chief executive John Goodall says: “House prices got off to a rocky start in 2018. Despite record low mortgage rates remaining largely unchanged since the rate rise, and November’s stamp duty reforms said to have already benefited 60,000 first time buyers, owning a property remains out of reach for many aspiring homeowners looking to get their foot on the housing ladder.”
He adds: “The Chancellor’s commitment in the Spring Statement to build more affordable homes is welcome, but this needs to stop being put forward as the only solution. Encouraging institutional investment in large scale developments, specifically designed to rent rather than buy, will help to control house price growth while also improving living standards for the thousands still relying on the buy-to-let market.”
Chartered surveyors e.surv’s director Richard Sexton adds: “2018 has begun with the inexorable rise in annual house price inflation.” He said the removal of stamp duty for the majority of first-time buyers plus near record-low mortgage levels meant market conditions were looking more favourable for first-time buyers.
But he adds: “This shouldn’t draw our attention away from the bigger picture. Our lack of supply continues to push prices up year-on-year, and saving for a deposit is one of the biggest challenges would-be homeowners face.
“More housing initiatives need to be put in place if we are to see a real improvement in our supply.”