House prices are increasing strongly across most parts of the UK, with prices in London again showing the highest growth. Increases of 10.5% in the year to May have been recorded by ONS, up from...

House prices are increasing strongly across most parts of the UK, with prices in London again showing the highest growth. Increases of 10.5% in the year to May have been recorded by ONS, up from 9.9% in the year to April 2014.

Annual house price increases in England were driven by a record annual increase in London of 20.1% and to a lesser extent increases in the South East (9.6%) and the East (8.6%). Excluding London and the South East, UK house prices increased by 6.4% in the 12 months to May 2014.

On a seasonally adjusted basis, average house prices increased by 0.8% between April and May 2014.

In May 2014, prices paid by first-time buyers were 11.3% higher on average than in May 2013. For owner-occupiers (existing owners), prices increased by 10.1% for the same period and house price annual inflation was 11.0% in England, 6.5% in Wales, 3.6% in Scotland and -0.7% in Northern Ireland.

David Newnes, director of Reeds Rains and Your Move estate agents comments:

“The housing market recovery continues to seep across the country beyond the capital. Consumer confidence is travelling further afield, but a balanced view has to be taken as some regions of the country have seen very little house price growth. Places like Lancashire and York are still experiencing annual growth below 1%. There are also new signs that growth is beginning to slow as we move into summer. In London prices have begun to fall at the upper end of the market, and the City of Westminster and the City of London have now seen house prices drop in the last twelve months. In four of the top five most expensive London boroughs, average house prices have dipped below their respective peak levels.”

With new affordability regulations and stress tests tightening mortgage approvals, the Help to Buy scheme remains a crucial link in bolstering first-time buyer demand and fuelling activity outside of London. Help to Buy may not be making a difference in London, where prices often exceed the upper eligibility limit, but it is a vital aid for aspiring homebuyers in parts of the country where prices are still regaining ground lost during the recession.”

Paul Smith, CEO of haart, comments:

“The headlines from the ONS House Price Index shout that London has grown by a record of more than 20% year-on-year followed by the South East with house prices there nudging 10%. However, dig a little deeper and recent statistics from the same government department show that nine of the 12 regions of the UK are still below their peak in January 2008.

This helps keep things in perspective. It's a positive that house prices are continuing to recover around the UK while London remains a law unto itself – but even here we are seeing prices tail off which is a good thing. More stock is coming onto the market and with it more choices for buyers. The market generally is not over-heating so the government and Bank of England must take great care not to apply the brakes too early.”

Richard Sexton, director of e.surv chartered surveyors, commented:

“Buying a home may be getting pricier, but appetite for property is yet to wane, particularly among first-time buyers. Lending to high loan-to-value borrowers hit a post-crisis record in June. And as prices rise, more buyers are being forced to take out proportionally larger loans – or face being left on the side-lines. Fortunately, lenders are offering far more options to support those looking to get onto the ladder, recognising the importance of keeping the bottom of the market accessible. Although there is the prospect that the new loan-to-income caps may curb lending to many worthy first-timers.

Price rises are centred in the capital – where foreign investors and buy-to-let landlords are adding to the demand for homes. Removing London from the frame reveals a much calmer outlook. Across the market, although prices are still rising, total home lending is beginning to stabilise. But to really make a difference, house building must be up-scaled in order to ensure there is enough property to satisfy demand. That would ensure the market continues on a steady path into the future.”

Peter Rollings, CEO of Marsh & Parsons, comments:

“Renowned worldwide as a hub for business, investment and culture – London has always enjoyed unrivalled popularity as a place to live and work in, and this demand has fuelled growth on an entirely different trajectory to the rest of the UK.”

After a whirlwind start to the year, the dust is now settling. Increasing consumer confidence has encouraged sellers to put their property on the market, boosting supply and relaxing competition, and prices are stabilising as the market returns to more normal trading conditions. The increased supply of property for sale is throwing buyers a much-needed lifeline and benefiting sellers, who now have wider choice for their onward purchases. This new injection of calm into the market will sustain healthy activity levels for the duration of the year, and ensure the recovery continues to wash across the country.”

Andy Frankish, new homes director at Mortgage Advice Bureau (MAB), comments:

“House prices made a clear annual leap of more than 10% in May, bringing good news for current homeowners who could be propelled onto the second rung of the property ladder as a result of improved housing equity. Further increases are more of a concern for first-time buyers, however, who face a proportionally higher rise compared to existing owners [11.3% versus 10.1%].

Potential new buyers would do well to consider new build properties, which have increased in price by 3.8% less than pre-owned dwellings and generally come with fewer maintenance or improvement costs. The government's Help to Buy equity scheme and recent commitments from Lloyds Bank to extend 95% loan to value (LTV) lending to new-build properties* mean consumers will find plenty of financial assistance available for new build properties.

With new work on housing currently driving the construction industry, first-time buyers should find new build homes an increasingly affordable and realistic option.”