South East hotspots drive house price growth
House price inflation in London and the South East is responsible for the rise in national property values over the past year, official data has shown.
By Iona Bain
The House Price Index, released by the Office of National Statistics, revealed that a particularly high rate of house price inflation in England, at 9.7 per cent, was the main driver behind the rise in property values in the 12 months to February 2014.
This is including what the ONS called “substantial house price growth in London and the south-east”, at 17.7 per cent and 8 per cent respectively.
Excluding these hotspots, the overall rate of house price inflation was just 5.8 per cent, marginally ahead of the rate of house price rises in Wales at 5.3 per cent.
By contrast, property prices grew more modestly in Scotland and Northern Ireland, at 2.4 per cent and 2.8 per cent respectively.
First-time buyers were also forced to pay 10.5 per cent more on average in February 2014 than in the same month last year, while those already on the property ladder saw a smaller rise in property values over the same period at 8.6 per cent.
Andy Knee, chief executive of outsourced property services provider LMS, said the ONS figures showed that more homes must be built to ensure “generation rent” is not priced out of the market.
He said: “The government should strive to ensure affordable housing for people at the bottom of the property ladder and fulfil their promises on creating an additional supply of homes. This is especially true of aspiring buyers in London.
“It will be interesting to see the potential impact of the mortgage market review coming into play this month, which may cool the market as more rigorous borrowing measures are introduced.”
Alex Reynolds, independent mortgage adviser at London-based Advies Private Clients said: “I would not be surprised if house prices rose another 10-15 per cent in the next year, but it is unlikely to be sustainable and we could see a correction when interest rates return to a historic average of 4-5 per cent. People are panic-buying in London because they see where house prices are heading, and the younger generation are being forced to move out of the city or live at home.”
9.1% – Overall rise in house prices in 12 months to February 2014
17.7% – Rate of house price inflation in London in same period
9.7% – Annual house price inflation in England including London and South East
5.8% – Annual house price inflation in England excluding London and South East