16th September 2014
House prices increased by 11.7 per cent in the year to July to an average of £272,000, while London saw a steeper rise of 19.1 per cent to £514,000, official figures reveal.
The jump is the biggest annual rise for seven years and the housing charity Shelter says it shows the market is “completely out of control”.
Country by country, average house prices increased 12 per cent in England to £284,000, 7.4 per cent in Wales to £171,000, 7.6 per cent in Scotland to £198,000 and 4.5 per cent in Northern Ireland to £139,000, the report from the Office for National Statistics shows.
In England and Scotland average house prices have passed their pre-financial crisis peak, in Wales they have nearly recovered, but in Northern Ireland they still have some way to catch up.
House prices in a number of English regions reached record levels. The East Midlands, West Midlands and South West have joined London, the East and the South East in having price levels higher than their pre-financial crisis peaks in 2007/08.
The North East had the lowest average house price at £156,000.
Campbell Robb, chief executive of Shelter says: “This shocking rise in house prices leaves even more people priced out of a stable home.
“The dream of their own home is slipping so far out of reach for young people and families across the country, the only choice they face is to become part of the ‘clipped wing generation’ stuck living in their childhood bedrooms, or ‘generation rent’ paying out dead money to landlords.”
He says that research by the charity reveals parents helping their children onto the housing ladder give an average £23,000, with many dipping into retirement pots to do so.
He adds: “This is a housing market completely out of control. Politicians must take action now to build the affordable homes we need, and give back hope to all those priced out and bearing the brunt of our housing shortage.”
Brian Murphy, head of lending at Mortgage Advice Bureau, takes a different view.
He says: “Rising house prices have been cast as the villain of the housing market for many months now, but for many people, the boost in property prices over the last year signals a healthy and recovering market.
“For a large number of existing homeowners, a significant rise in the value of their home can free them to secure a better mortgage deal.”
A report by MAB estimates that there are around three million property prisoners who are trapped in their current mortgage for reasons such as low or negative equity and tighter lending criteria.
Yet every 1 per cent rise in house prices gives mortgaged homeowners another £23bn of housing equity, providing many more borrowers with sufficient freedom to qualify for low-rate products and cut their monthly payments.