New data released by the Office of National Statistics have revealed that in the year leading up to December 2014, house prices went up by 9.8%. This is down 0.1% from 9.9% in the year to November 2014. In Britain, the average house now costs £272,000.
Overall, across the UK house price growth has been robust. London was the area with highest rate of growth with 13.3%, with the East and South East at 11.4% and 11.5% respectively. The lowest rate of inflation was 4 % in the year to December in the North West region.
On a countrywide basis, the annual inflation up to December 2014 was 5.5% in Scotland, 4.9% in Northern Ireland and 4 % in Wales. It was significantly more in England, at 10.2%. Furthermore, the average price of a home went up 9.5% in the year to December for a first-time buyer and the average cost they paid for a property landed at £208,000.
Since August 2014, inflation has decelerated on house prices. Despite this fact, inflation on the cost of property is still significantly greater than rises in other facets of the economy including the growth of income. This means people are finding it extremely difficult to purchase a home, especially first-time buyers.
The chief executive at Shelter, Campbell Robb, reacted to the ONS report by stating: ìAnother rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.î
He went on to refer specifically to those looking to purchase their first home. He commented: ìWhen young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem.î
Stephen Smith who works at Legal & General echoed these sentiments. He stated: ìIncreases above the rate of inflation stop those on lower incomes and first time buyers from being able to afford a house. To ease the pressure on house prices, we need to build more homes. Demand still outstrips supply in the UK, particularly in areas such as London and the South East.î
The amount of mortgage loans given out in December rose 1.5% from the previous month to 55,600 loans. Therefore, for the entirety of 2014, 677,000 mortgage loans were settled- this is an 11% rise on 2013 revealing the overall rise in the purchase of property.
The director general of the CML, commented on the data: ìImproving economic conditions, boosted by government schemes like Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years. The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and weíd expect this steadying of the market to continue in 2015.î