14th October 2014
The housing market showed further signs of slowing as official figures revealed that prices increased 11.7% in the year to August, unchanged from the rise in the year to July.
The Office for National Statistics data showed that prices rose by 19.6% in London, which was largely responsible for the overall increase in England.
The average house price across the UK in August was £274,000 and London continued to be the UK region with the highest average house price at £514,000.
The North East had the lowest average house price at £154,000.
Stephen Smith, director at Legal & General Mortgage Club, said: “The summer has seen a slow down in the rapid house price growth we saw in the first six months of 2014.
“Whilst some people who own properties might be disappointed by the cool down, in reality, rapid house price growth is not good news for the market as a whole. Sharp increases combined with squeezed incomes make it very difficult for first-time buyers and also prevents those who already own a house from being able to move up the ladder.”
Smith added that over the long term, price rises closer to the rate of inflation are preferable if we want a healthy and sustainable market.
Howard Archer, chief UK and European economist at IHS Global Insight, said: “We suspect that house prices rises will be constrained as buyer interest is limited by more stretched house prices to earnings ratios, the prospect that interest rates could start to rise before long (albeit gradually) and tighter checking of prospective mortgage borrowers by lenders.
“Meanwhile, limited supply of houses on the market has for the time being at least been diluted as a factor pushing up house prices.”
He added: Even so, house prices do seem likely to keep rising over the coming months – with support coming from a relatively strong economy, high and rising employment, elevated consumer confidence, still relatively low interest rates and some pick up in earnings growth in 2015.
“In addition, housing supply tightness will still likely be a factor supporting prices to some degree in a number of areas.”