House prices rise by 7% on an annual basis in October

15th December 2015


UK house prices rose by 7% on an annual basis in October, up from 6.1% on the previous month, according to the new figures from the Office for National Statistics.

The ONS reported that property prices increased by 0.8% on a month-on-month basis, marking the fourth successive rise as it followed increases of 0.8% in September and 0.9% in both August and July.

Howard Archer, chief UK and European economist at IHS Global Insight believes that house prices will see solid increases over the coming months amid firm buyer interest, supported by decent fundamentals, and a shortage of properties.

He said: “We expect house prices to rise by around 6-7% in 2016. The shortage of properties poses a significant upside risks to these forecasts.”

However it remains to be seen how the Chancellor’s measures in the Autumn Statement affect the housing market.

“In the near term, it is very possible that the decision to impose a 3% surcharge on Stamp Duty on purchases of buy-to-let properties and second homes from April 2016 will lead to an increase in housing demand and exert upward pressure on prices as prospective buyers look to beat the increase.

“Further out, the move could modestly dilute housing market activity and upward pressure on prices,” added Archer.

Elsewhere trade body, the Council of Mortgage Lenders reported that mortgage advances for house purchases rose 8.5% month-on-month and 3.3% year-on-year to 65,300 in October.

There were similar increases for first time buyers and for home movers. The CML commented: “Home owner and buy-to-let activity have both continued the upward trend seen last month, and the market looks set to finish the year strong, despite taking time to gain momentum after a slow start to 2015.”

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