In the 12 months to April 2013 house prices in the UK rose by 2.6%, down from a 2.7% increase in the 12 months to March 2013, according to the latest House Price Index from the Office for National Statistics (ONS).
The organisation reported that house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average.
The year-on-year increase reflected growth of 2.8% in England and 6.2% in Wales, which were offset by declines of 1.2% in Scotland and 0.8% in Northern Ireland.
Annual house price increases in England were driven by a 6.0% rise in London and a 3.6% increase in the East Midlands.
Excluding London and the South East, UK house prices increased by 1.4% in the 12 months to April 2013.
On a seasonally adjusted basis, UK house prices increased by 0.4% between March and April 2013.
In April 2013, prices paid by first-time buyers were 4.7% higher on average than in April 2012. For owner-occupiers (existing owners) prices increased by 1.9% for the same period.
Giles Hannah, managing director of London agency VanHan, said the national average figures demonstrated a clear divide between London, the home counties and then the UK as a whole.
He said: “In London, house prices will likely continue an upwards trend over the next three years owing to the severe lack of supply of new homes actually ready and completed. Internationals from Singapore and Hong Kong are buying off plan in new developments, particularly in Covent Garden, which has seen prices soar in the past year. 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.
“Average London house prices are up 6% and the UK as a whole up 2.6%. In prime central London wealthy French nationals, evading France’s tax hikes, are fuelling price rises in the market as they relocate their families in time for the new school year in September, pushing up prices in Holland Park, Notting Hill and South Kensington. Over in Knightsbridge and Mayfair, several wealthy Nigerian families are buying at the top end having had a record two years in oil production. The aim is to maintain and grow their wealth in London.
“However, agents are concerned that UK homeowners are not moving but taking a ‘wait and see’ approach because they can’t compete with wealthy international buyers who have exchange rate advantages. Demand for property may be high but there are very few UK transactions taking place and agents have little new stock to sell. This position is hardly likely to improve over the summer months.
“While rising house prices are good for sellers, the same is clearly not true for first-time buyers. They are paying 4.7% more, on average, than a year ago, so even though mortgage options are becoming increasingly available, it is costing them more to get on the first rung of the ladder. One wonders how sustainable such growth in pricing is for this group in particular.”