14th July 2015
UK house prices rose by 5.7% in the year to May 2015 to an average of £274,000, official statistics reveal.
The largest annual increase was in the East, where prices rose 9.3%, followed by the South East with a 8.2% rise.
The Office for National Statistics revealed the lowest growth in May 2015 was in the North East, where prices increased by 1.9% over the year to £154,000.
In the capital prices increased by 4.7% over the year to £503,000. London, the South East and the East all had prices higher than the UK average price of £274,000.
Prices grew by 5.8% year-on-year to £286,000 in England, by 2.5% to £170,000 in Wales, by 2.9% to £193,000 in Scotland and by 10.5% to £152,000 in Northern Ireland.
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), says: “House price growth has visibly slowed for the last two months: April saw the lowest rate of annual growth since late 2013, and despite picking up in May, house prices remain substantially below the 10% gains observed this time last year.
“Homeowners are still benefitting from a significant uplift in the value of their properties but there are encouraging signs that the market is returning to a more stable footing.”
Murphy adds: “The moderation of house price growth will go some way in easing affordability concerns. House prices are still rising roughly twice as fast as wages, but the gap between the two is far less severe than in previous months. Price pressure in London has also been significantly reduced: however, this will prove little comfort in regions like the East and South East, where annual growth remains high.”
Andrew Bridges, managing director of Stirling Ackroyd estate agents, says: “The cost of living might be under control – but the cost of a place to live is taking off. So lower inflation doesn’t apply to everyone. If you’re looking for a home, cheaper clothes and air tickets aren’t a great consolation in the face of steepening property prices and rents.
“Rising house prices are a sign of success. Particularly in London, a world-class city is witness to world-class competition for the most desirable properties.
“But the workforce for a booming economy can’t be housed with a sluggish supply of new homes. Moreover, the danger of treating London like a single body is that it muddies the picture. It only takes a single stop on the Tube to see a completely different side to the capital
“As normal people are inventive in their search for a home, our internal figures show unexpected areas like Hackney bounding and leaping ahead of house price growth in the old property strongholds in West London.”
Bridges adds: “We’re optimists, but London needs to take action to avoid becoming a victim of its extreme success.
“Over the next decade, our analysis shows the capital needs another half a million homes. In the meantime, an open mind about location will help buyers and renters in their search. But in the long run there is a massive business case for faster investment in new build properties – and the planning reforms to make it happen.”