Latest figures from the Office for National Statistics (ONS) have revealed that UK house prices increased by 12.1% in the year to September 2014, which marks the highest annual increase since July 2007 and puts the typical UK home at £273,000. However, while year-on-year growth looks strong, there are also some suggestions that the market may be cooling, with month-on-month rises slipping from record highs.
The upward surge in annual house prices follows the more moderate house price growth witnessed since April 2012. This is largely attributed by the ONS to the power of the London housing market, with prices in the capital showing the highest annual growth rate of 18.8% to reach an average house price of £508,000.
London was also supported by strong growth in the eastern regions of the country. Prices in the East and South East grew by 13.4% and 11.6% respectively, and significantly, the East of England displayed the highest annual growth rate since August 2003.
However, by taking the powerhouses of London and the South East out of the equation, annual house price growth across the rest of the country was slightly more muted with a rise of 9.1%, giving an average house price of £208,000.
While year-on-year growth was found to be strong to September, the results on monthly house price growth were more subdued. The ONS found that while average house prices increased by 0.5% on a seasonally-adjusted basis between August and September, prices in several regions slowed slightly from the record levels witnessed in August.
This suggests that the housing market may be starting to moderate, with monthly growth in most regions pulling back from the rapid rises witnessed earlier in the year.
This assertion is supported by other house price reports, with Rightmove's November House Price Index reporting drops in seller asking prices month-on-month. Its results for November found that the price of property coming onto the market had fallen by 1.7% from October. This suggests that the "mini-boom" witnessed over the last few months is waning.
However, while the prices have indeed fallen, this is a typical feature of the property market at this time of year as the quieter winter months step in. In fact, November has recorded a drop in new seller asking prices in eight out of the last 10 years, and 2014 actually marks one of the smallest drops seen for the last five years.
"Selling is more difficult than it was earlier in the year, though the mini-boom experienced by much of the country has hit the pause rather than the stop button," explains Miles Shipside, Rightmove director and housing market analyst. "Underlying demand remains strong but has been muted by higher prices stretching affordability at the same time as the ability to borrow more to fund those higher prices has been curtailed by tighter mortgage lending criteria.
"After an active year it's a sensible pause and, with the winter months approaching, sellers are hoping a cheaper asking price may spur those scarcer buyers into action."
So, while the market is currently reporting a drop-off in price rises, the market on the whole is still looking strong, with demand set to continue into the new year. Therefore, if you've been thinking of taking the plunge and putting down that deposit, now may be the perfect time to start your search. The next year may see house prices pick up once more, but for now, sellers are trying to competitively price their properties, so you could steal a great deal.
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