House prices surge by fastest monthly rate since financial crisis with typical property adding £8k in March, official figures show
05-23-2016
• Typical home cost £292k in March, ONS data reveals
• Monthly leap of £8k the biggest since the recession
• London prices added £30k in one month - or nearly £1k a day
By Lee Boyce for www.Thisismoney.co.uk
Property prices soared in March to record the biggest monthly leap since the financial crisis, official figure have shown.
The typical home cost £292,000 in March, a rise of £8,000 compared to February, according to the latest data from the Office for National Statistics. This is the biggest monthly price leap since the recession gripped the UK and hit property values hard.
The rise was driven largely in London and the South East. Annual house price increases were registered at 13 per cent in London, 12.2 per cent in the South East and 12.1 per cent in the East of England.
Hot market: The property market is showing no signs of slowing down in London - prices were up £30k in just one month
A big catalyst to this is the fact landlords were rushing through house purchases ahead of the three per cent stamp duty surcharge which came into force on 1 April.
The figures - which lag a month behind other indexes - shows annually, UK house prices are up nine per cent, higher than the 7.6 per cent in February. A year ago, a typical UK property sat at £273,000.
What next for mortgage rates: Record low deals on offer but how long should you fix?
Jeremy Duncombe, director of the Legal & General Mortgage Club, said: 'Given that these figures cover the period leading up to the buy-to-let stamp duty rise, it's no surprise that they show another strong monthly increase in house prices.
'However, even without this surge in buy-to-let activity, house prices are still increasing annually at a rate that sits well above any rise in average earnings, making our housing market even less affordable as each month goes by.'
One way traffic: This graph from the ONS shows how fast property prices have grown since the financial crisis
Jeremy Leaf, a former Royal Institution of Chartered Surveyors chairman and north London estate agent, adds: 'We might have expected the house-price increases to be higher bearing in mind the surge in activity prior to the stamp duty hike in April.
'However, this is likely to be the last big rise for a while as more realism enters the market, although a shortage of listings and low transaction levels may underpin house price increases in future.'
Incredibly, prices in London were up £30,000 in a month – or roughly £1,000 a day. This adds to the widening gap between the capital and other areas in the country.
In London, prices are now typically £552,000 and in the North East, the cheapest pocket of England to buy, prices are £158,000, a gap of £394,000.
Five years ago, a property in London on average cost £351,000 and in the North East £137,000 – a smaller gap of £214,000.
Getting the right mortgage is essential to making sure buying a home is as affordable as possible.
There are hundreds, if not thousands, of options out there, so, as well as doing your own research, this is an occasion to search out expert opinion from a good mortgage broker.
This is Money’s best buy table (right) highlights quite how low the best two-year fixed mortgages have fallen.
Our mortgage calculator and best buys table can show you a full list of the best deals that suit your circumstances. Check to see if you can find a cheaper mortgage here.
You can also get fee-free advice from our carefully chosen mortgage broker partner London & Country.
Those on the hunt for the best rates and wondering whether to fix or track - or how long to fix for - should also read This is Money's regularly updated What next for mortgage rates?
Big gaps: The typical London home fetched more than £550k in March compared to £158k in the North East
Rob Weaver, from property crowdfunding platform Property Partner, said: 'London, the South East, and the East of England is the engine driving house price inflation and the divide between north and south is not just widening, it's gaping.
'Depressingly for first-time buyers, hopes of keeping up with the market are just slipping away.'
Annual house price annual inflation was 10.1 per cent in England, 2.1 per cent in Wales and 6.4 per cent in Northern Ireland. However, prices in Scotland have fallen -6.1 per cent.
Excluding London and the South East, UK house prices increased by 5.9 per cent in the 12 months to March 2016, according to the monthly ONS index.
Capital gains: The light blue line shows just how fast values in the capital have climbed in recent times
In March 2016, prices paid by first-time buyers were 9.7 per cent higher on average than in March 2015. For existing owners, prices increased by 8.7 per cent for the same period.
Also today, the Council for Mortgage Lenders figures reveal that homeowners borrowed £13.8billion for house purchases in March, up 59 per cent month-on-month and 60 per cent year-on-year.
First-time borrowing was up 32 per cent monthly and home movers up 75 per cent.
Howard Archer, economist at IHS Global Insight, said: 'A potential major downside risk to housing market activity and prices comes from the vote on EU membership on 23 June.
'A vote to leave the EU would be liable to see a marked hit to UK economic activity over the rest of this year and in 2017 amid heightened uncertainties, which would likely weigh down heavily on the housing market.'