House prices in the UK increased by 2.9 per cent in the 12 months to May 2013, according to the House Price Index from the Office for National Statistics.
It found that house price growth remains stable across most of the UK, with prices in London increasing faster than the UK average.
The year-on-year increase reflected growth of 3.1 per cent in England, 0.8 per cent in Scotland, 0.6 per cent in Wales and 1.9 per cent in Northern Ireland.
May 2013 is the first month that Northern Ireland house prices have grown year-on-year since February 2008.
In May 2013, prices paid by first-time buyers were 4.1 per cent higher on average than in May 2012. For owner-occupiers (existing owners), prices increased by 2.5 per cent for the same period.
David Brown, commercial director of LSL Property Services, comments: “Strong price growth in May is another encouraging sign for the economy and the housing market in general. But that’s not the whole picture. Equally, it’s tougher news for anyone struggling to raise their first deposit. House prices are accelerating away from first-time buyers 60 per cent faster than they’re lifting the finances of existing owners.
“First-time buyers are still facing a three-pronged attack from encroaching inflation, weak wage growth, and paltry savings rates. That’s why the rental market is taking up the slack for plenty of households, as the monthly battle to make ends meet rages on. Building a solid recovery in the housing market and the rest of the economy is vital. More homes are being built, although the market desperately needs more – especially since the latest government-backed schemes are increasing demand from buyers.”
Brian Murphy, head of lending at Mortgage Advice Bureau (MAB), said: “The hike in house prices continued in May with growth reported across all parts of the UK. Despite existing owners paying 2.5 per cent more on average for properties than in May 2012, first time buyers are bearing the brunt of the increases with prices 4.1 per cent higher than they were last year.
“Help to Buy has played a significant part in the market’s resurgence, with nearly to 7,000 reservations to date. However, the next step of the scheme must seek to improve market access. Despite the availability of record fixed rate deals, the current market favours higher earners and less affluent buyers are still finding their options limited as deposit requirements rise in line with house prices.
“The arrival of 0 per cent mortgages will help their cause and we hope to see the mortgage guarantee scheme offer a practical way for lenders to engage buyers higher up the loan-to-value (LTV) curve.”
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