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First Time Buyer

UK house prices soar 5.5%

Julia Rampen
Written By:
Julia Rampen

Buoyant markets in all parts of the UK drove house prices up 5.5% in the year to October, the Office for National Statistics house price index has revealed.

London house prices leapt 12% on October 2012. Across England, house prices jumped 5.7%, while Wales and Scotland both saw growth of more than 2%. Northern Irish house prices experienced the highest year-on-year growth since January 2008, at 4.8%.

Alexander Gosling, director of the online estate agents Housesimple.co.uk, said: “Since the recovery began the contrast between the property market in South East England and the rest of the UK has been embarrassingly polarised. With the London market cooking on gas and racking up double-digit rates of annual growth, many other regions struggled to even smoulder.

“Now finally the momentum is spreading. Average prices outside London and the South East rose by 3.1% in the past 12 months – a shadow of the astronomical 12% annual growth in London, but still healthy and sustainable.

“After taking so long to heat up, it is the slow burning improvement in prices outside the capital and the South East that offers real hope for continued growth. Demand is outstripping supply in many areas and prices are responding accordingly.

“London remains at risk of overheating and buyers there should beware letting their confidence run away with them. Interest rates will surely rise in 2014 and those buying in haste and beyond their means now may repent at leisure later.”

Prices for first-time buyer homes increased most rapidly, with first-time buyers paying 5.9% more than they did in October 2012. For owner-occupiers, prices increased by 5.3%.

Despite this, SPF Private Clients chief executive Mark Harris said cheaper mortgage rates meant first-time buyer mortgages are more affordable: “However, it is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens.”