- Average UK property prices increased by 6.7% in a year, ONS said
- Typical cost of a home across the country is now £288,000
- Prices dropped 0.2% between November and December, data reveals
Owning a home is becoming an ‘unachievable dream’ experts warned, as official figures showed house prices are rising around three times faster than wages.
The price of the average home in the UK jumped by £18,000 between January and December to reach £288,000. Overall, house prices nationally rose by 6.7 per cent on last year, data from the Office for National Statistics showed. They increased by 7.3 per cent in England, taking the average house price there to £301,000.
Booming demand in the East has led the rise, with house prices in the region growing by 9.7 per cent in a year – nearly five times faster than the rate of national wage growth.
Climbing: Average house prices across the UK increased by £18,000 or 6.7 per cent last year, as property price hikes continue to outpace wage growth ‘considerably’, official data shows
Prices in the region were an average of £315,000 in December, while those in the South East were up by 8.8 per cent in a year to £365,000.
The two areas were the only in the UK outside of London to have average house prices in excess of £300,000. In the capital, prices grew by 9.4 per cent to an average of £536,000.
Homes in the North East were the cheapest in England, with an average price of £155,000, while those in Northern Ireland were the most reasonable in the UK at £148,000 on average.
First time buyers spent an average of £219,000 on a home in December – 6.4 per cent more than they would have paid a year earlier.
ONS said price increases were triggered by a ‘shortage of supply and robust demand’ and warned that house price growth was ‘considerably’ outpacing wage rises.
It said: ‘The lack of availability of properties available in the market is constraining growth in the market and supporting price increases.’
Andrew Montlake, director of Coreco Mortgage Brokers, said rising prices were preventing people from getting onto the property ladder.
He said: ‘Many buyers will continue to be frustrated as they watch house prices disappear further out of their grasp, especially as there is no sign of wage growth to keep up.’
Homeownership was becoming an ‘unachievable dream for an increasing number of people’, said Stephen Smith of Legal & General Housing Partnerships.
He added: ‘Annual house price inflation has risen at a level that far exceeds inflation and wage growth… The disproportionality between supply and demand is driving up competition for homes which is in turn forcing people to pay more to secure a property.’
Campbell Robb, chief executive of housing charity Shelter, said millions of first-time buyers would remain ‘trapped’ in rented homes unless they had help from their parents.
Separate figures published yesterday by the Council of Mortgage Lenders (CML) showed more money was lent to first-time buyers, home movers and buy-to-let investors last year than at any point since 2007.
Regional variations: Mix-adjusted average house prices across the UK by region
Expensive: With an average price of £536,000, London remains the country’s most expensive region to buy a house, the ONS said
Mortgage lenders have been offering some of their lowest ever home loan rates in recent months, encouraging people to buy before interest rates increase.
First-time buyers borrowed £46.7billion in 2015, up 4 per cent of 2014, but took out the same number of mortgages – 311,700 – reflecting the fact asking prices had risen.
The number of loans handed out to buy-to-let landlords in December was up by 30 per cent on the same month last year, with the value of the mortgages up 36 per cent to £3.4billion.
Increased interest from landlords follows an announcement by the Chancellor George Osborne in November that he would increase the stamp duty paid by buy-to-let investors from April. Estate agents have reported a rush of interest from landlords trying to beat the tax hike.
Paul Smee, director general of the CML, said improving economic conditions and first-time buyer schemes like Help to Buy were behind the increasing lending figures.
He said: ‘The market has seen a gradual upward trajectory over the past few years, rather than rapid growth, and we’d expect this trend to continue with gross lending steadily increasing over the next two years.’
UK house prices: Mix-adjusted house price index since January 2004, according to the ONS
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