House prices leap 4.5% in month

OFFICIAL figures today confirmed fears that the UK property boom has gathered pace in recent months, with first-time buyers, in particular, facing soaring costs.

House price inflation surged from 7.8% in March to 10% in April, according to figures from the Office of the Deputy Prime Minister. The study also revealed the average price leapt 4.5% to £168,600 in just one month, although the ODPM warns the figures are not seasonally adjusted.

'The market over the past year in most regions has been characterised by stronger price growth at the lower end of the price range,‘ the report said.

The average price for a flat rose by 7.2% in April and by 5.2% for a terraced house. By comparison, the rise in detached houses was only 3.1% month-on-month.

Once again, there was bad news for those trying to get a foot on the property ladder. The average completion price for first time buyers rocketed 8.2% in April to £135,505. The year-on-year increase was 18.3% compared with 10% a month earlier.

Simon Rubinsohn, chief economist at broker Gerrard, was surprised by the apparent buying power of first-time buyers.

'If these numbers are an accurate picture of developments in the property market, they suggest that it may prove more resilient than many commentators currently believe,' he said.

In England, prices overall gained 9.2% ahead of the 6.7% increase recorded in March, while in London prices were up 7.9% from 4.9%. Wales saw the strongest rise of the home countries with an increase of 23.1% while Scotland saw a 20.7% increase. Northern Ireland was weakest with prices climbing just 5.5%.

House price rises gathered pace in every region except the North-East where annual inflation slowed from 26.2% to 22.7%. Values in the South-East rose just 3.6%, slightly ahead of the previous month.

Earlier this month, more up-to-date studies from lenders suggested an already buoyant property market had picked up again. Halifax said price rises had accelerated from 19.1% to 20.4% while Nationwide reported an increase from 18.9% to 19.5%.

However, the ODPM's figures still reflect more modest rises. The difference, it said, was due to different methodology. It puts more onus on expensive properties, such as detached homes, which have been rising at a slower rate than flats and terraced homes.

The Bank of England's monetary policy committee has attempted to put the brakes on the market by rising interest rates from 3.5% to 4.5% in the past eight months. Last week, after data repeatedly suggested house prices were still racing ahead, it announced the first back-to-back rise in rates for four years.

PRICES of luxury pads in the capital have bounced back, according to the Knight Frank London Prime Property Index.

Values rose 0.9% in May compared with 0.3% in April. The improvement follows a 1.9% fall in prices last year. 'All price ranges from £500k upwards have seen dramatic rises since the end of last year,' the report said.

Useful links