The rate of house price growth has reduced to 6.2% in a year even though moderate UK demand continues to exceed supply.
Latest data from the Office of National Statistics (ONS) showed UK house price growth of 6.2% for the year to January 2017 is below the average 7.4% annual house price growth seen in 2016.
For the UK average house prices are £218,255 which is 0.8% higher over the month with the highest rise in London of 3.0% and average prices are £490,718.
The rise in property values means first time buyers would require a larger deposit to purchase their first home and for home movers the increasing gap between their current and future home means they need a larger mortgage.
There have been decreases in house prices in the last month with Yorks and the Humber down -2.6%, the North East lower by -1.5% with Wales, East Midlands and North West lower by up to -0.6%.
Property listings remain level
According to the Royal Institution of Chartered Surveyors (RICS) report for January 2017 shows 11th consecutive months with no improvement in the national listings of houses.
Average prices and annual change for the UK to January 2017 from the ONS are shown below.
| Area | Annual changes | Property values |
|---|---|---|
| London | 7.3% | £490,718 |
| South East | 7.4% | £319,369 |
| East of England | 9.4% | £279,231 |
| South West | 7.4% | £243,203 |
| England | 6.5% | £234,794 |
| West Midlands | 5.8% | £179,633 |
| East Midlands | 5.6% | £174,222 |
| North West | 4.6% | £149,767 |
| Yorks and the Humber | 2.7% | £148,458 |
| Wales | 4.2% | £145,933 |
| Scoltand | 4.0% | £142,233 |
| Northern Ireland | 5.7% | £125,480 |
| North East | 2.2% | £123,781 |
There has been little change in the transaction volumes and new buyer enquiries for the month and the Bank of England data shows volume of approvals for house purchase decreased by 3.9% compared to January last year.
London was reported as the only area where near term prices expectations are negative, whilst in all other UK regions price expectations are positive.
One advantage of the rise in house prices is older equity release mortgage buyers can stay in their home while accessing the wealth in their property, using this for any purpose such as home improvements, holidays or giving to a family member.
Outer London boroughs strong gains
For boroughs in outer London the annual house price growth remains strong as homebuyers look for value away from high values in central London.
Leading the capital is Waltham Forest with prices up 15.7% or £61,381 over the year to a new high with average property values at £453,292.
Average prices and annual change in London for January 2017 from the ONS for the top ten boroughs are shown below.
| London borough | House prices |
Annual changes |
|---|---|---|
| Waltham Forest | £453,292 | 15.7% |
| Newham | £371,734 | 14.0% |
| Barking and Dagenham | £288,960 | 11.7% |
| Redbridge | £413,466 | 11.4% |
| Havering | £353,579 | 11.3% |
| Haringey | £572,806 | 10.3% |
| Lewisham | £421,434 | 9.5% |
| Croydon | £364,261 | 9.4% |
| Enfield | £397,004 | 9.0% |
| Bexley | £331,180 | 7.7% |
Strong gains from Newham with prices higher by 14.0% over the year saw average property values of £371,734 rise by £45,744 with Barking and Dagenham up by 11.7% and the lowest average house value in London of £288,960.
For remortgage buyers higher prices give them an opportunity to release capital which they can use to improve their home.
In contrast for buy-to-let landlords would require a larger deposit and mortgage to buy and higher rental income to cover the interest costs.
For London, the average house price paid by first time buyer is £429,666 up 3.1% in the last month and for home movers is £553,039 up 2.8%.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything, repay an interest only mortgage or even benefit a family member.
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