UK house prices rose by 5.8 per cent to a new record in the year to February, increasing by half a per cent on the previous month, according to data on Tuesday from the Office for National Statistics (ONS).

Slow down in London

Prices in London slowed to an annual rate of 3.7 per cent, the slowest increase seen for almost five years. The nationwide figure remained well below the annual price growth of 7.3 per cent recorded in 2016.The ONS said, “The main contribution to the increase in UK house prices came from England, where house prices increased by 6.3 per cent over the year to February 2017, with the average price in England now £234,000.“Wales saw house prices increase by 1.8 per cent over the last 12 months to stand at £145,000. In Scotland, the average price increased by 3.1 per cent over the year to stand at £139,000. The average price in Northern Ireland currently stands at £125,000, an increase of 5.7 per cent over the last 12 months.”

A struggle for first-time buyers

A first-time buyer now faces paying six per cent more for a home than a year ago, with the average price in this sector now standing at £183,857.The lowest annual growth rate was recorded in the UK's oil capital of Aberdeen, where prices fell by 9.6 per cent over the year to stand at £161,000. This compares to the country's most expensive borough, Kensington and Chelsea, where the average price for a house was £1.4 million.Nicholas Finn, executive director of Garrington Property Finders, commented, “The gently increasing rate of price growth is welcome – but no one should confuse it with robust health in the property market. Rather it’s a symptom of the chronic lack of supply.“The number of homes for sale is still very limited in many areas, with the RICS reporting that listings have remained stagnant for 12 months in a row. Ordinarily, such constrained supply, plus the continued availability of incredibly cheap mortgages, would drive prices up much faster than they are. So it’s a measure of how much power buyers have that prices are still rising at such modest levels.“Though there are increasing numbers of committed and motivated buyers coming to market, they remain deeply price sensitive – and will happily walk away from properties they feel are overpriced.“As ever the market is split between extremes. While there is a lot of competition for mid-priced properties – where there’s simply not enough stock to go around – at the top end of the market, buyers are increasingly able to push for and get big discounts.“With consumer price inflation holding steady in March, the Bank of England will continue to delay any interest rate rise for as long as possible, leaving the way clear for the property market to continue its slow upward progress.“These are positive numbers from the housing market, and while one swallow does not a summer make, it could be the start of the spring market.”For related news and features, visit our Residential Property section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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