House prices only ever seem to be going one way at the moment – up. Although the last couple of months have shown some welcome signs of moderation, latest figures from the Office for National Statistics (ONS) have pushed prices straight back up again.
According to April's House Price Index, prices have risen by 9.9% year-on-year – meaning the typical UK property now costs a whopping £260,000. This is the highest annual increase since May 2010 when prices increased by an even bigger 10.6% and it's a clear increase from March's annual growth rate of 8.0%, while on a monthly basis prices increased by 2.0%.
However, as ever, London is fuelling this rate of growth. Prices in the capital posted an annual rise of 18.7% while those in the South East increased by 8.9% year-on-year, and excluding these regions house prices increased by a much more modest 6.3%.
It isn't necessarily a bad thing either, as Brian Murphy of the Mortgage Advice Bureau (MAB) comments:
"Strong house price growth is no longer a trend restricted to the South. In comparison to London , many regions had been dragging their feet in terms of housing recovery, so consumers in these areas will undoubtedly benefit from a sizeable boost to their housing equity."
Homeowners will no longer be stuck in the equity trap which will, ideally, encourage more movement in the market, potentially leading to an increased level of supply to cater to the ever-growing level of demand from all sectors. It's good for potential investors too, with Karen Bennett of Shawbrook Bank adding that rising prices are providing "a promising environment for experienced property investors who are looking to engage with a buoyant property market."
But, no matter what sector of the market you're coming from, there's bound to be one thing at the top of the agenda – affordability. Prices paid by owner-occupiers increased by 9.5% in the 12 months to April 2014 while those paid by first-time buyers rose by 10.7% over the same period, so those still to get on the ladder could be finding it tough to source a property in their price range.
However, the full impact of the Mortgage Market Review is yet to be realised. If it has the constraining effect expected – and there are already signs of the market starting to cool – house prices could start to even out if demand were to drop due to a fall in application and approval volumes.
"While London's house price growth has soared over the past year, recent data indicates that the capital's housing market is starting to come off the boil, with prices growing at a much slower rate and even falling in some boroughs," added Brian. "As the year progresses and the changes implemented by the Mortgage Market Review (MMR) have time to bed in, we may well see a more relaxed pace of growth take hold."
Check out the Moneyfacts Mortgage True Cost Index
Find the best mortgage deals with our whole of market search
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.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.