House Prices Rise In January

House prices in the UK were 6.8 per cent higher in January than at the same time in 2013, a faster rate of growth compared with the previous month, which showed a rise of 5.5 per cent, according to official figures out this week.

The Office for National Statistics (ONS) revealed that property prices were up 3.8 per cent in the year to the end of January but that figure excludes London, where prices rose by 13.2 per cent.

House prices grew annually by 7.1 per cent in England, 6.9 per cent in Wales, 1.4 per cent in Scotland and 2.7 per cent in Northern Ireland, with prices in London and the South East now above their January 2008 peak.

The rise in the cost of housing is mainly due to the shortage of property available for purchase, with the Home Builders Federation (HBF) claiming that the UK is one million homes short of the number it requires to meet its housing needs.

According to the HBF, to reduce the long-term trend in house price inflation to 1.8 per cent and help more people back in the market would now require 260,000 private houses to be built a year.

Last week the Office for Budget Responsibility predicted that house price inflation would peak at 9 per cent this year but these figures already show an inflation rate of 7 per cent.

Meanwhile, separate figures from the major banks revealed that mortgage borrowing in February was at its highest level since August 2008, with £11.5bn of gross mortgage borrowing, up 47 per cent on the same month last year, although the number of mortgages approved was slightly lower than in January.