House prices soar by 9.9pc

Sarah Davidson

June 17, 2014

They rose by 2.0% on a seasonally adjusted basis between March and April alone.

London continued to drive the inflation, as prices increased by 18.7% in the capital, while they also fluctuated by 8.9% in the South East.

Indeed, if those two regions were taken out of the equation the increase would be just 6.3%.

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Karen Bennett, sales and marketing director, commercial mortgages, Shawbrook Bank: “The continued strength of house prices shown by the latest ONS figures won’t come as a surprise for anyone in the industry.

“Again, house prices are driven by London and the South East, but it’s important not to forget the state of housing in the rest of the country.

“House prices in other regions are increasing at a slower rate but are rising and are a promising environment for experienced property investors who are looking to engage with a buoyant property market.

“It will be interesting to see how later in the year overall demand for housing and house prices are affected by tightening residential controls due to the MMR.”

Prices increased by 10.4% in England, 3.3% in Wales, 4.8% in Scotland and 2.6% in Northern Ireland.

Despite the substantial increase, Nicholas Ayre, managing director of buying agency Home Fusion, said: “The market has turned a little since the period the ONS is reflecting and buyers are now taking a breath.

“The upward pressure on prices has subsided as buyers have decided that they won’t pay just anything. We are seeing the market correct itself without the need for blunt instruments of intervention from the Bank of England.

“Potential buyers are also paying heed to the never-ending warnings from Mark Carney regarding interest rate rises. Even those clients of mine who are buying for cash and don’t need a mortgage are paying attention to the warnings, and taking their foot off the gas a little.”

The average price paid by first-time buyers increased by 10.7% year-on-year to April, coming to 199,000.

Home mover prices meanwhile increased by 9.5% annually to April, up from 7.2% to March, as the average price paid for a house by a former owner-occupier reached £299,000.

Stephen Smith, director, Legal and General Mortgage Club and Housing, added: “Over the coming months it will be important that the market is encouraged to grow in a healthy manner.

“Whilst an increase in people looking to buy property indicates recovery in the wider economy, current levels of housing supply are not sufficient to meet demand now or in the coming months.

“Across the UK 250,000 new houses need to be built each year to meet this demand and ensure house prices remain at an affordable level. As it stands, however, we are only constructing around half that number.”

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