Inflation in the shops might be languishing near zero but UK property prices surged by an annual rate of nearly 8 per cent in January, official figures showed today.
As Office for National Statistics data showed consumer prices rising by just 0.3 per cent in February, their house price data showed the average UK house price had jumped by 7.9 per cent since January 2015 to reach a new record high of £292,000.
Average property values stood at a record high of £306,000 in England, while in London, the average price of a home now stands at £551,000, after leaping by 10.8 per cent year-on-year.
But that was rate was exceed in the South East outside London, where the average is now £374,000 after an annual growth rate of 11.7 per cent.
Winter rush: Across the UK, house prices rose by 0.9 per cent month-on-month in January – but the annual rate was 7.9 per cent
The ONS said a first-time buyer faces paying 7.7 per cent more for a property than a year earlier, with the average price paid for a starter home standing at £222,000.
The North East continues to be the English region with the lowest average house price, at £156,000.
The North East is the only English region where house prices are yet to surpass their previous peak reached before the economic downturn. In stark contrast, the index for London is now 53.4 per cent higher than its pre-downturn peak, reached in 2008.
Jeremy Leaf, a former RICS chairman and north London estate agent said the January jump ‘reflects a busy period for the housing market, as investors hurried through purchases ahead of the stamp duty hike in April’.
‘While this is not that surprising, what is of more interest is the increase in properties coming to market, as detailed in yesterday’s Rightmove report, and whether this will feed through to a softening in prices in coming months,’ he added.
Across the UK, house prices edged up by 0.9 per cent month-on-month in January.
The figures also show a sharp contrast between the pace of annual price growth in England, where property values have leapt by 8.6 per cent, and that recorded by other UK nations.
House price inflation peaked at more than 12 per cent in July 2014 but it is starting to tick up again in 2015 according to the ONS.
In Wales, property values dipped annually by 0.3 per cent to reach £174,000 on average, while in Scotland they increased by 0.1 per cent to reach £195,000 typically and in Northern Ireland they increased by 0.8 per cent, taking the average house price to £153,000.
Current house prices in Wales, Scotland and Northern Ireland all sit below previous records for these nations.
Onwards and upwards: Property prices have soared since 2009.
House prices in Northern Ireland still have some way to climb to reach their pre-downturn levels, with the index there still at 42.9 per cent below its peak reached in August 2007.
The ONS said that if London and the South East of England were taken out of the figures, instead of UK house prices increasing by 7.9 per cent annually, they would have seen an uplift of just 5.1 per cent.
In recent months, there have been some signs of housing market activity being increased by buy-to-let landlords rushing to beat a stamp duty hike. From April 1, buy-to-let investors will pay three percentage points above current stamp duty rates when they buy a property.
Property website Rightmove said this week that the average asking price for a home has passed the £300,000 milestone across England and Wales for the first time.
Richard Snook, senior economist at PwC, said the ONS figures show a ‘mixed’ performance across the UK, while the South continues to ‘power ahead’.
He said: ‘The recent changes to stamp duty, whereby supplementary rates will be charged on purchases of additional homes, may be providing a small boost to the market, as people rush to complete transactions before the changes come into force in April this year.’