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House prices are up – but growth is moderating

House prices are up – but growth is moderating

Category: Mortgages

Updated: 20/08/2014
First Published: 20/08/2014

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

There's no denying the fact that house prices are increasing, but latest figures from the Office for National Statistics (ONS) provide more evidence that the market is starting to moderate.

According to the data, house prices increased by 10.2% in the year to June 2014, slowing slightly from the annual growth rate of 10.4% recorded in May. This puts the average house price at £265,000, just 0.5% higher than May, which is the same monthly price increase as that recorded in the same period a year earlier.

So, although prices are still increasing, the pace of that growth is starting to slow. It continues to be led by London, which saw the highest annual increase of 19.3%, but when discounting house price inflation in the capital and the South East (which saw annual growth of 9.7%), prices increased by a much more modest 6.3% in the 12 months to June. While all regions and constituent countries posted growth, some saw less of an increase than others, with the slowest rate of growth being in Wales, which saw an annual increase of just 3.5%.

This should hopefully allay any fears that the market is heading into bubble territory. Prices are increasing at a fairly moderate pace, particularly when discounting London, and this kind of growth will actually be welcome news for a lot of homeowners who may be hoping to get on the next rung of the property ladder.

However, it won't be such good news for first-time buyers. This sector of the market witnessed the strongest rate of growth in the last year, with prices paid being 12.0% higher than in June 2013. This is the highest annual increase for FTBs since April 2010, and means the typical price of a home bought by a first-time buyer reached £204,000 in June. Owner-occupiers also paid more than a year ago, but they saw a lesser price increase of 9.5% over the same period, although their typical property price is still significantly higher at £304,000.

But, even though it'll cost you more to buy a home than it did a year ago, that's no reason to be disheartened. The last year has also seen an increase in the number of high loan-to-value mortgages available, so if you've only been able to save a small deposit you could still have a chance to get on the ladder.

There are still some great mortgage deals to be found too, but you'll need to be quick. The average rate of a typical fixed rate mortgage is slowly starting to edge up, so if you want to keep your monthly budget in check, make sure you check out the best rates and fix before they're gone.

What next?

Find a great mortgage deal using our mortgage calculator.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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