In the 12 months to March 2013 UK house prices increased by 2.7%, up from a 1.9% increase in the 12 months to February 2013, the Office for National Statistics (ONS) has reported.
House price growth remains stable across most of the UK, although prices in London are increasing and prices in Northern Ireland are falling.
The year-on-year increase reflected growth of 3.0% in England and 1.2% in Wales, which were offset by declines of 1.7% in Scotland and 2.0% in Northern Ireland.
Annual house price increases in England were driven by a 7.6% rise in London and a 3.3% increase in the South East.
Excluding London and the South East, UK house prices increased by 0.6% in the 12 months to March 2013.
On a seasonally adjusted basis, UK house prices increased by 0.4% between February and March 2013.
In March 2013, prices paid by first-time buyers were 1.3% higher on average than in March 2012. For owner-occupiers (existing owners) prices increased by 3.2% for the same period.
Giles Hannah, managing director of London estate agency VanHan, said: “The national average figures demonstrate a clear divide between London, the home counties and the UK as a whole. In London house prices are likely to continue on an upwards trend over the next three years with a severe lack of supply of new homes actually ready and completed. Buyers from Singapore and Hong Kong are snapping up properties off plan in new developments, particularly in Covent Garden. This is not a bubble, the market is simply rising with increased demand, a severe lack of supply and an improving economy in the UK, which shows no signs of slowing.
“In prime central London we are seeing a swathe of wealthy French nationals keen to evade France’s tax hikes, who are fuelling the market as they relocate their families in time for the new school year in September. Subsequently, prices are rising in Holland Park, Notting Hill and South Kensington.
“In Knightsbridge and Mayfair wealthy Nigerian families are buying at the top end having had a record two years in oil production and are wishing to maintain and grow their wealth in London. As the gold price continues to dip, now by $400 per ounce since October 2012, investors are moving their funds into UK property in much higher numbers.
“There is a concern among agents that UK homeowners are not moving as they adopt a ‘wait and see’ approach, while they can’t compete with the purchasing power of the wealthy international buyer who also has exchange rate advantages. Although demand for property is high there are very few transactions actually taking place and agents have little new stock to sell.”