Despite recent reports of the Olympics having an adverse effect on the housing market, house prices actually increased by 2% in the 12 months to July, according to the latest data from the Office of National Statistics (ONS).
The ONS data revealed a broadly stable picture. House prices have reportedly held firm in most areas across the UK, with the exception of London, where they continue to rise gradually. Conversely, in Northern Ireland, house prices have dropped by 10.9%.
England experienced a growth of 2.4%, which was offset by declines in Scotland and Wales of 1.1% and 0.2% respectively, and the aforementioned decline in Northern Ireland. The North West experienced a decline of 1.3%, whilst house prices in the North East were down 0.5%
The 2% annual price increase was largely a result of the 5.7% increase in London property prices and also increases in the East of England (2.4%) and surprisingly, Yorkshire and the Humber (2%).
If you take London and the South East out of the equation, a more telling picture emerges. Without these two regions, house prices in England increased by 0.6% in the 12 months to July.
The ONS also carry data on value trends for different property types. They found that house prices for new dwellings and pre-owned properties were up 1.6% and 1.9% respectively.
In July 2012, prices paid by first time buyers were 1.8% higher than they were in July 2011.
David Newnes, director of LSL Property Services (the company that owns Reeds & Rains), said: “It is a testament to the resilience of the housing market and the important role played by cash buyers that house prices are rising annually, despite the bleak economic outlook and moribund mortgage market. As lending remains suppressed across the country, activity has been supported by the vibrant demand from cash investors in London, and this has filtered outwards.”
Mr Newnes also warned pointed out the effects of a rise in house prices, and highlighted a solution for keeping the property market moving:
“Whilst it is highly encouraging for home owners that house prices have risen, the down side is that it intensifies the pressure for new buyers who must save up even higher amounts for deposits, a feat made harder by the very tight credit conditions at present. Progress can be made if lenders focus on offering attractive mortgage products to help support those frustrated buyers currently relying on the private rented sector, which would drive activity right up the property chain.”
Source: Property Wire.