London house prices jump by twice the average income
London house prices jump by twice the average incomeHouse prices are rising "strongly" across most parts of the UK with a record average of £253,000, new figures from the Office for National Statistics show
Figures from the Office for National Statistics show the average UK house price stands at £254,000, up from £194,000 five years ago
The majority of the country is now seeing strong year-on-year growth in property prices, according to the ONS Photo: ALAMY
By Edward Malnick
London homes increased in value by more than twice the average person’s income last year, figures show.
The typical value of properties in the capital rose by £63,000 in the last year, reaching an average of £458,000.
The surge came amid record rises in home prices across the country, according to figures published on Tuesday by the Office for National Statistics (ONS), prompting warnings of “runaway train” increases. Experts said the rise in London prices was particularly “extraordinary” when separate figures issued on the same day showed that inflation had fallen to a four-year low.
A graph showing the average house price increase
Properties in Britain rose in value by 9.1 per cent between February 2013 and February 2014, up from 6.8 per cent in the year to January 2014, with a 1.9 per cent increase between January and February alone. The steepest rises were in London, the South East and East of England, the ONS data shows.
Those attempting to get on the property ladder face paying 10.5 per cent more for a home than they would have done a year ago, with the typical price paid by first-time buyers reaching £192,000. The average income of people purchasing their first properties is now £47,000.
The figures came after experts announced last week that the housing boom was spreading across the country, with rapidly increasing prices and long queues of buyers no longer restricted to London.
A separate study earlier in the month had shown that that homes in the capital now cost more than 100 per cent more than properties elsewhere, with a wider gulf between the capital and the rest of the country since data was first collected in the 1970s.
Critics say the sharp rises in property prices demonstrate that the housing market is out of control. However others argue the growth is sustainable and is benefiting the wider economy.
The latest monthly house price index from the ONS shows that prices in London rose by 17.7 per cent in the last year to February 2014. The typical rise in the capital was £63,000 – more than double the average annual earnings in Britain, which amount to £27,000.
The average property price in the UK is now £253,000 – up by almost £50,000 compared to 2010 prices. The typical home in London now costs £458,000.
The majority of the country is now seeing strong year-on-year growth in property prices, according to the report.
The steepest rise was in London, while the smallest percentage increase, of 2.4 per cent, was in property prices in Scotland.
The slowest rises in England are in the North East, which recorded a 2.9 per cent annual rise, pushing typical prices there to £146,000.
By contrast, prices in the South East lifted by 8 per cent.
The typical cost of a home has jumped annually by 9.7 per cent in England to reach around £264,000. The rise in house prices in England is the fastest seen since June 2010.
The figures fuelled concerns that the increases in prices amounted to “runaway train” rises. Some experts said the Government's Help to Buy scheme, helps people to get onto the housing ladder with smaller deposits, was partly to blame.
Sam Bowman, research director of the Adam Smith Institute think tank, said: "Help to Buy is likely to be one factor in these price rises, because the scheme inflates demand by subsidising home buying.
"But the biggest cause of these runaway train price rises is the planning system, which makes it inordinately difficult for new construction to take place to allow supply to meet demand."
Kris Hopkins, the housing minister, said: "Our long-term economic plan and efforts to cut the record deficit we inherited mean interest rates remain at a record low making home ownership more affordable.
"And through schemes like Help to Buy we're helping people get on the property ladder with a fraction of the deposit they would normally require, with leading developers pledging to build more as a direct result of this increased demand."