House price growth in October remained strong, with the average price of a home in England hitting £300,000 for the first time, new figures have revealed.
According to the Office for National Statistics, UK house prices increased by 7.0% in the year to October to an average of £287,000.
Annual house price increases in England were driven by an annual increase in the East of 10.4% and the South East of 9.5%.
Average house prices in October reached £174,000 in Wales, £196,000 in Scotland and £158,000 in Northern Ireland.
Excluding London and the South East, UK house prices increased by 5.6% in the 12 months to October 2015.
Annual house price annual inflation was 7.4% in England, 1.0% in Wales, 0.9% in Scotland and 10.3% in Northern Ireland.
Jeremy Leaf, former RICS chairman and north London estate agent, said: “These figures reinforce the findings of other recent surveys, demonstrating that the housing market is heading towards a boom and bust that the government is partly responsible for but said it wanted to avoid.
“The boom is being engineered because investors and second homeowners are rushing to buy before April and avoid higher stamp duty. Afterwards, we will see a much quieter market, with rising rents and affordability becoming more stretched as lending criteria tightens and interest rates potentially rise.”
The increase in house prices is being driven by the lack of supply and strong demand. As part of a drive to help first-time buyers on to the property ladder, the government recently announced it will invest £7 billion to build 400,000 homes as well as a number of other measures, including an increase in stamp duty.
Halifax believes that the increasing difficulty getting on the housing ladder combined with the prospect of a rate rise will put the brakes on house price growth next year.
Britain’s largest mortgage lender said in its 2016 forecast that house prices are set to increase by between 4% and 6%, with growth expected to slow more sharply in London than elsewhere.
Richard Sexton, director of e.surv chartered surveyors, said: “The door to the housing market remains open, but many people are still unable to cross the threshold due to a shortage of suitable stock.
“More people are now in the position to sell-up and move – or to get on the ladder for the first time – but many are being house-blocked by the lack of homes for sale. In the South, this intense competition for property is driving some buyers away from London, and areas like Cambridge in the East and Reading in the South East are seeing extra buyers scour their centres and suburbs for potential homes. Prices are rising almost everywhere, but these thriving commuter destinations are showing the fastest growth.”
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