House prices up 1.9 per cent on the year says ONS but concerns about affordability revive

16th April 2013

The Office for National Statistics says that UK house prices have increased 1.9 per cent this February compared with February 2012. The average UK house price is £233,000.

This is down from a 2.2 per cent year on year increase from January 2013. The report says that house price growth remains relatively stable across the UK with London and Northern Ireland the biggest anomalies with the former showing big increases and the latter substantial falls.

The year-on-year increase reflected growth of 2.1% in England and 4.1% in Wales offset by declines of 1.2% in Scotland and 7.7% in Northern Ireland.

Annual house price increases in England were driven by a 5.9% rise in London and a 2.4% increase in the North East. Excluding London and the South East, UK house prices increased by 0.6% in the 12 months to February 2013. On a seasonally adjusted basis, UK house prices were unchanged between January and February 2013.

In February 2013, prices paid by first-time buyers were 1.6% higher on average than in February 2012. For owner-occupiers prices increased by 2.1% for the same period. Some experts say the housing market recovery will start to hurt first time buyers again despite the much heralded help for new buyers in the Budget.

David Brown, commercial director of LSL Property Services, says: “Increasing house prices are a positive sign for the housing market, but a growing hurdle for a new generation who want to share in that prosperity. Insipid wage growth and chronically high inflation are riding roughshod all over first-time buyers’ finances, and higher house prices will only make it harder for them to get the mortgage they want. At this rate the average new buyer will have to get together £2,800 more than a year ago for their first home – that’s an increase of £230 every month.

“Unless the flagship Help-to-Buy schemes are matched by new building to help increase the supply of housing, there’s little sign this will change.  Both aspects of Help-to-Buy rely on a 5% deposit from the buyer.  On average that’s £8,650.  With hourly wages down 8.5% since 2009, for a huge section of people that isn’t achievable.  Even for those lucky enough to have a 5% deposit, this is currently being devalued at a rate of £12 pounds a month.  Increasing tides of people are making use of the private rented sector, and the rental market itself will have to expand to provide for them.”

13 thoughts on “House prices up 1.9 per cent on the year says ONS but concerns about affordability revive”

  1. dutch says:

    ‘The employment rate has now risen to 72.7% and is moving ever nearer to the pre credit crunch peak of 73%.’

    http://www.bbc.co.uk/news/business-26265858

    ‘ the number of self-employed has increased by 573,000 since the recession of 2008-09 – a rise of 15%.

    In the latest quarter’s data around three quarters of the 193,000
    increase in people in employment comes from people employing themselves.’

    https://www.gov.uk/government/collections/dwp-statistical-summaries
    DWP states 2.47 million claiming ESA which is a substantial drop from the Incapacity benefit count.

    Does it mirror the rise in the self employed?One does wonder how much of that rise has been caused by benefit changes?

    1. Forbin says:

      as I’ve posted before

      give every unemployed person a zero hours contact regardless of hours worked and there will be no unemployed

      Still be costing the tax payer for benefits though to “top up”

      Forbin

  2. midge says:

    Hi Shaun ” inflation is projected to remain at or slightly below the “2% target” is this another moving goal post as didn’t the Chancellor raise this after many months of being above this figure.

    1. Anonymous says:

      Hi Midge

      i do not recall the Chancellor saying that can you remind me in what context please? Actually the Bank of England has forecast inflation to be on target throughout most of the credit crunch as it is reality which has differed! If there is a change now it is that on current trends there is a higher chance it will turn out to be true.

  3. Drf says:

    “The employment rate has now risen to 72.7% and is moving ever nearer to the pre credit crunch peak of 73%.” However it seems that this is not only due to zero hours contracts, increasing self-employment and all the other manipulated elements of statistics for employment and unemployment numbers. A whistle blower has reported on the other tricks being applied, as reported in the Daily Mirror. http://www.mirror.co.uk/news/uk-news/stitching-up-claimants-part-job-says-3537051

    1. Anonymous says:

      Hi Drf

      Thanks for the link which tells some heart-rending stories which I hope are untrue. As to manipulation of government figures as regards unemployment this was subject to satire 30 years or so ago.

      ” Jim Hacker: The school leaving age was raised to 16 so that they could learn more, and they’re learning less!

      Sir Humphrey: We didn’t raise it to enable them to learn more! We raised it to keep teenagers off the job market and hold down the unemployment figures.”

      I guess the most recent move in the education sphere was to encourage more to go to universities..

  4. Anonymous says:

    Shaun,
    When does the new pension contributions kick in ? – unless there is mass opt out many will find less disposable income available and employers resisting pay rises as need to make their contribution to the new pensions as well!

  5. Noo 2 Economics says:

    Real wages (compared to CPI) will start rising in May/June – thankfully, they aren’t yet, as my model said May/June accompanied by increasing inflation from July/August, with inflation ending the year at 2.5% and continuing upwards!

    A post of yours a few months ago suggested wages may be rising already which scared me because if it was right we had an immense inflationary event approaching as I posted at the time.

    On a point of order the wage rise numbers you quote Shaun, relate to January – March whilst Private sector survey data relate to April according to your phrasing.

  6. Eric says:

    I wonder if Carney was thinking about the insolvent banks when he said “we can’t perform miracles”

  7. JW says:

    Dear Forbin, ‘reality’ is whatever ‘capital’ wants it to be, ‘capital’ has all the levers. ‘capital’ has realised that a never-ending slow milking of ‘labour’ will never quite produce the conditions for revolution especially with all the tech ‘levers’ now at its disposal. We are through the looking glass, this is it, its hard to see how it changes.
    Its a gilded cage, best get used to it.

  8. Anonymous says:

    Hi Forbin

    This was a see you in 3 months (because economic growth looks good and inflation is below its target..) sort of Inflation Review. The danger was that the level of dovishness displayed upsets the strength of the Pound £ for longer than just one day. If so then the inflation issue will return to the agenda and the Goldilucks “just right” scenario fades.

    Of course even now “just right” involves ignoring the housing market and the trade deficit.

  9. Anonymous says:

    Hi JW and welcome back to the comments section

    I agree that particularly in the periphery of the Euro area labour has been really tested and yet there has been no revolution. This is even more of a surprise if you look at the track record of the countries most affected. Have we become more like the Eloi in The Time Machine by HG Wells?

  10. JW says:

    Hi Shaun
    Kept reading but spent a lot of time in the States and the time difference meamt commenting was pretty useless.

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