House prices rose for a third month in a row in May, increasing by an annual 2.2% after a 1.3% rise in April, the Office for National Statistics revealed this morning.
The ONS said private rents increased by 8.6% in the 12 months to June, slowing slightly from May’s 8.7% rise. Average house prices in England rose 2.2% to £302,000, lifted 2.4% in Wales to £216,000 and jumped 2.5% in Scotland to £191,000 in May.
In the first three months of the year, average house prices in Northern Ireland rose 4% to £178,000.
London experienced the most significant monthly increase with a movement of 3.9% while the South East saw the smallest monthly price growth, with a rise of 0.3%
Yorkshire and the Humber experienced the greatest annual price rise, up by 3.9%, however, London saw the lowest annual price growth, with a rise of 0.2%.
INDUSTRY REACTION
Iain Mckenzie, The Guild of Property ProfessionalsIain McKenzie, CEO of The Guild of Property Professionals, says: “Another solid month of growth in house prices is great news for sellers during the summer months, when footfall at estate agents is at its highest.
“Modest levels of annual growth in London and the South East are not surprising, considering prices have been overinflated in the region for many years.
“The latest transactions data shows a fifth consecutive increase in sales, meaning that more people are getting on the property ladder. This can only be good news for buyers and sellers alike, with sellers in particular not being forced to reduce their asking price so significantly.
“The political upheaval has settled, and the new government is getting its feet under the table. We have already seen a renewed commitment to house building which will go a long way towards filling the gaps in areas with a shortage of available homes.
“The key to allowing first-time buyers to make the most of new homes is ensuring that they are affordable and competitively priced for the area.
“The next barrier that needs to be tackled is the availability of mortgage deals and how easy it is for households to make their repayments.
“With inflation coming down within target levels and economists hopeful for inflation on core services to fall too, we should see the Bank of England lower interest rates in the coming months. This should be the shot in the arm that lenders need to ramp up better fixed-rate mortgage offers.”
Nicky Stevenson, Fine & CountryNicky Stevenson, Managing Director at national estate agent group Fine & Country, says: “House prices defied predictions with a stronger-than-expected performance in May as the economic tide continues to turn.
“The property market is gearing up for a summer boost, driven by May’s economic rebound and stable inflation rates. After April’s stagnant figures, this recovery marks a promising shift in the real estate landscape.
“These positive indicators could allow the Bank of England to lower the base rate this summer. This adjustment would make mortgages more affordable and accessible, opening doors for many, especially first-time buyers.
“Meanwhile, we’re already seeing increased activity, with HMRC figures showing a 17% rise in transactions compared to last year. This uptick reflects easing financial pressures amid the improving economic climate.
“May’s economic strengthening was bolstered by a rise in construction, which grew at its fastest rate in nearly a year. The surge in house-building and infrastructure projects is set to boost the supply of homes, helping to balance rising demand.
“As we move further into summer, these factors paint a picture of a robust and dynamic property market, poised for growth and supported by increased supply and improving affordability.”
Sam Reynolds, Zero DepositSam Reynolds, Chief Executive of Zero Deposit, says: “Much of the noise leading up to the election was predictably focussed on the housing market, however, with rents continuing to climb, it’s imperative our new Government gives the current rental crisis the focus it deserves.
“Today’s figures give a sense of the task ahead of the Labour government. We need more rental homes and ultimately, it is what they’ll be judged on as the single most important initiative to solve the demand-supply imbalance and the considerable rental cost inflation.
“There are other welcome, progressive changes that give fair protection to tenants and genuine stimulus for landlords to engage in the sector with ambition – but fundamentally, we need more rental properties to control spiralling costs.”
Ed Phillips, LomandEd Phillips, Lomond Chief Executive, says: “Sold prices have continued to climb in recent months despite the fact that mortgage rates are yet to come down.
“Now that the dust has settled on both the general election and England’s Euros ambitions, both of which have acted as distractions to buyers and sellers, we expect the market will now pick up the pace as we enter what is traditionally the busiest time of year.
“This market momentum is only likely to accelerate when a cut to interest rates does materialise and this is very much a case of when, not if.”
Marc von Grundherr, Benham and ReevesMarc von Grundherr, Director of Benham and Reeves, says: “Despite the brief period of political uncertainty spurred by a snap election, we’ve seen little deviation from both buyers and sellers with respect to their property transaction plans and this has ensured that positive house price growth has been maintained.
“While higher mortgage rates continue to restrict buyer purchasing power at present, it’s only a matter of time before interest rates are cut.
“When this does happen, we expect it to act as a significant shot in the arm to the UK property market and the slow but steady performance of recent months should giveaway to an altogether more active market landscape and a stronger rate of house price appreciation.”
Verona Frankish, YopaVerona Frankish, Chief Executive of Yopa, says: “House prices have continued to creep up in recent months which demonstrates that market confidence has been building, but it’s fair to say that we’re currently witnessing the calm before the storm.
“There’s a great deal of pent up demand on the side of buyers at present and whilst some of this will now be released post-election, we anticipate that the real surge in market activity will come once interest rates start to ease.”
Colby Short, GetAgent.co.ukColby Short, Co-founder and Chief Executive of GetAgent.co.uk, says: “Having weathered the storm of higher interest rates and the more recent blindside of a snap election, the property market remains in very fine health.
“It’s still too early to say for sure if a post-election bounce is in progress, however, the sentiment coming from agents on the ground is that they are gearing up for a very busy summer.
“For those sellers who may still be sitting on the fence, now is the time to act if you want to have your home market ready in order to take advantage of improving market conditions.”
