ONS reveals another year of rising house prices

House prices rise again, according to the latest figures from the Office for National Statistics (ONS) offering investors reason to cheer but promising further woe for wannabe buyers and generation rent.

The monthly rise from May to June 2015 was a mere 0.1% but on a yearly basis, the ONS reported prices in June were up 5.7% on what they had been in June 2014. In the year to May 2015, the rise was 5.6%.

In England, house price inflation was 6.1%. Wales and Scotland saw prices creep up at 0.8% and 0.6% respectively, while Northern Ireland saw a 9% jump.

England’s price rises were driven by an annual increase in the East of 9.2% and the South East of 7.7%.

Excluding London and the South East, UK house prices increased 5.2% in the year to June 2015. On a seasonally adjusted basis, average house prices went up by 0.4% between May and June 2015.

In June this year, first-time buyers paid prices that were 5.1% higher on average than in June 2014. For owner occupiers, meanwhile, prices increases by 6% for the same period.

Reacting to the figures, Andy Knee, chief executive of LMS said: “A shortage of housing supply has driven prices up in recent months, compounded by a rise in activity throughout the summer months. Demand is high, and house price growth is no longer restricted to the South: the East of England saw the biggest annual increase in June. As houses continue to get snapped up and supply lags behind, there will be no letting up in house price increases. This means it will not just be first-time buyers that are increasingly restricted, but also younger families hoping to move up the property ladder.

“Mounting speculation about a base rate rise is also spurring activity, with hopeful buyers looking to purchase now to lock in competitive rates while record low mortgages are still on offer. An interest rate rise – however small – would impact household budgets and see monthly payments increase.

“Slow wage growth continues to be a factor for those hoping to buy a home, and rising house prices means saving enough for a deposit is a difficult challenge. It is vital government and the housing sector assess how they can tackle this and the issue of housing supply to improve affordability, so homeownership isn’t restricted to those lucky enough to have support from the bank of mum and dad.”

Brian Murphy, head of lending at Mortgage Advice Bureau said: “In June, there were no shocks or surprises for homebuyers with annual house price growth increasing by just 0.1 percentage point from the 5.6% seen in April and May. Compared to this time last year, when buyers were faced with annual house price rises of 10.2%, conditions are looking far more affordable. Growth is also no longer restricted to the south, with a 9.2% annual rise in the East of England being the main driving force behind these figures. At the same time, price pressure in the capital has eased remarkably since last year, with annual growth down from 19.3% in June 2014 to just 5.3%.

“However, with the average house price at £277,000 and house prices still rising faster than wages, many aspiring homeowners will struggle to save the amount required for a deposit. While it is positive to see the rate of house price growth for first-time buyers is below that for existing homeowners, this is not far off the average UK growth. Improved availability of high loan-to-value (LTV) mortgages – and not just through the Help to Buy scheme – would provide invaluable support for those struggling to meet deposit requirements.

“New dwellings have seen an annual drop in prices, suggesting Government initiatives to support and drive the new-build industry could be seeing some results. However, there is still a lot more that needs to be done in this sector, as the gap between supply and demand threatens to cause more affordability problems later down the line.”

Richard Bush, co-founder of equity based crowdfunding platform, Crowdlords said: “Yet again, house price inflation experienced during June will be toasted by existing property investors and landlords. However, this feel good feeling may well be lost on those looking from the outside in, with surging prices pushing the prospect of homeownership for first timers even further out of reach.”

Your News

If you've got a story that would be of interest to Builder & Engineer readers, send us an email

Features

2017-05-31 13:33

The rate of Insurance Premium Tax (IPT) will rise by two per cent on June 1 to 12 per cent on all non-exempt transactions. Martin Bennison, managing director at construction finance firm Ultimate Finance, explains what this means for UK construction companies.

2017-05-25 08:41

Building Information Modelling (BIM) is growing in popularity and is now mandatory for centrally funded public-sector projects. Experts and the curious are gathering more and more frequently at dedicated congresses, exhibitions and workshops. Many people are now asking: Where does the UK stand on the issue of BIM and the digitisation of the construction industry?

2017-05-10 10:47

Opening site doors to more females is vital to plugging the construction skills gap, reports Claire Cameron

THE construction industry continues to be plagued by a well-documented skills gap with some suggesting the shortage could get worse before it gets better.

2017-05-08 14:27

If you work on a building site, are self-employed or have a zero-hours contract, you might be surprised to know you work in the ”gig economy”. This is the economy characterised by temporary work and irregular hours, pay and working conditions.

2017-03-29 10:31

Jeremy Gould, VP sales Europe, TomTom Telematics, discusses how technological developments in vehicle telematics have opened up new workflow management possibilities for the construction industry

2017-03-21 09:31

With the demand of oil increasing, it’s estimated that the Earth will reach its full capacity for oil consumption at some point within the next 20 years. This is despite the production of oil decreasing, and the construction industry is no exception to this, reports Niftylift.

2017-03-17 10:55

With construction firms leading the way in drone technology, Claire Cameron takes a closer look at how unmanned aerial vehicles (UAVs) can be used onsite

2017-03-07 16:20

While the physical safety of workers is prioritised on construction sites, mental health is often overlooked, reports Claire Cameron

Free E-newsletter Sign-Up

Sign up for our free e-newsletter

Looking for a company or service?