In the 12 months to July 2013 UK house prices increased by 3.3%, up from a 3.1% increase in the 12 months to June 2013, according to latest data published by the Office for National Statistics (ONS).

Prices in London are increasing faster than the UK average. Annual house price increases in England were driven by London (9.7%), the South East (2.6%) and the East Midlands (2.4%).

The year-on-year increase reflected growth of 3.7% in England and 1.8% in Northern Ireland, offset by falls of 2.0% in Scotland and 0.7% in Wales.

The UK HPI is still below the peak of January 2008. However, the England HPI, at 182.4 in July 2013, is now 0.9% higher than at the previous peak in January 2008.

Excluding London and the South East, UK house prices increased by 0.8% in the 12 months to July 2013.
On a seasonally adjusted basis, UK house prices increased by 0.3% between June and July 2013.

In July 2013, prices paid by first-time buyers were 4.0% higher on average than in July 2012. For owner-occupiers (existing owners) prices increased by 3.0% for the same period.

Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), comments:

“The news that house prices have continued to grow is another positive indicator that the industry is steadily recovering, with government initiatives stimulating the property market and tempting would-be homeowners to buy. The ONS figures should go some way to ease concerns that Help to Buy is already driving property inflation at a dangerous rate. Although house prices in London are increasing significantly faster than the UK average, overall house prices have risen at a stable rate, suggesting a recovery that is sustainable rather than combustible.

“Heated competition between lenders means affordability is still excellent. With such price variation between different parts of the country, the regional know-how of brokers, estate agents and surveyors holds the key for many people to securing a sensible mortgage deal on an appropriately valued home.

“However, the fact that prices paid by first-time buyers have seen the biggest growth shows that we need to proceed with a degree of caution. Although the wider choice of products and competitive rates mean that obtaining a mortgage is less of a barrier to buying a house, all players in the market need to work hard to accommodate buyers with limited funds at their disposal.”