26th September 2014
House prices in England and Wales have shot up 8.4% over the past year, the highest annual increase for nearly seven years.
Figures from the Land Registry show the average house price of £177,824, is now just a few thousand pounds shy of the November 2007 peak of £181,383.
Prices increased an average of 1% in July, with the majority of the growth once again driven by sky-rocketing prices in London and did little to back up the argument that the housing market in the capital is starting to cool.
Over the past year prices have risen 21.6% in London, compared to the slowest rate of growth experience in the North East of England of 3%.
All regions in England and Wales have witnessed positive house price growth over the month and annually, although in the South West and North West had the lowest monthly growth of 0.1%.
The figures from the Land Registry show fears about an increase in interest rates and accompanying mortgage payment hike are being ignored. The number of property sales in June totalled 73,158, up 11% from the same month last year at 66,123 and the good news is repossessions have fallen, down 36% to 794 in June from 1,238 in June last year.
Brian Murphy, head of lending at Mortgage Advice Bureau, said: ‘A considerable annual increase in property transactions combined with a sustained trend of falling repossessions suggests consumers are coping well with this change as the wider economy improves.
‘Rising prices are good news for second steppers, with our analysis of Office of National Statistics data showing every 1% increase in house prices is giving mortgaged homeowners another £23 billion of housing equity, freeing those who have been trapped in poor deals and unable to move. For first-time buyers, improved access to mortgage finance as lenders regain the appetite that was lost during the financial crisis keeps the property market within reach. Wider availability of high loan-to-value loans also ensure those who cannot save for a large deposit are not barred from buying their first home.’
Murphy gave one word of caution to ensure conditions remain affordable for consumers, particularly first-time buyers.
‘Although a certain degree of house price growth is necessary for a sustained recovery, prices that rise too fast could lock many potential buyers out of the property market,’ he said. ‘Continued financial assistance from the government through schemes such as Help to Buy is therefore crucial. The construction industry must also ramp up production of new homes to ensure the imbalance between supply and demand doesn’t tip some consumers out of the market completely.’