The latest data released by the Office for National Statistics (ONS) shows that the price of a typical home in the UK rose by 3.3% over the 12 months to December 2012.
This acceleration of house price growth outstripped consensus expectations of a 2.0% year-on-year increase.
Prices continue to rise much faster in London than elsewhere in the UK, with growth of 6.4% over the year to December, while the average increase across the rest of the country was a more sedate 2.4%.
Katie Evans, Economist, Centre for Economics and Business Research said: “London house prices have been driven by strong population growth in the region – the fastest in the UK according to the 2011 census – while housing supply growth has been sluggish.
“By contrast, population growth has been slowest in North East England, meaning housing demand is weaker. House prices in this region fell by 0.6% in the year to December.
“Bank of England data suggest that the Funding for Lending Scheme (FLS) has succeeded in reducing mortgage rates. The average two-year fixed rate on a 75% loan-to-value mortgage fell from 3.7% in August to 3.1% in January, while rates on a similar 90% loan-to-value mortgage fell by 1.2 percentage points from August to January – from 5.9% to 4.7%.
“The population of London continues to grow faster than the UK as a whole, while the housing supply growth fails to keep pace. House prices in this region are thus likely to continue to outstrip the rest of the UK, although as the international economy stabilises, ‘hot money’ flows from emerging markets are likely to be less prevalent this year, which may mean price growth is slightly slower here in 2013.
“Across the country as a whole, continued improved mortgage availability and lower mortgage rates as a result of FLS mean prices should continue to grow, although we do not expect them to surpass the pre-crisis peak until 2014.”Source: PropertytalkLive!