Residential property prices increased across Britain in May despite uncertainty ahead of the EU referendum and significantly higher stamp duty bills for landlords and second home buyers introduced in April, the latest figures show.
The newly revamped index from the Office for National Statistics (ONS) shows that the average price of a home rose by 1.1% in May compared with the previous month, adding £2,400 to the average price of a home which now stands at £211,230.
This increase was bigger than that seen in both April and March, and was led by gains in England, where the average price of a home rose by 8.9% annually, specifically fuelled by London and the South East.
In London, prices climbed 13.6% on the year to reach £472,163. In the South East and East, prices were up 12.9% and 12.8%, respectively.
“Despite a recent slowing down in London, the capital still remains the engine of the housing market in the longer term, showing price rises more than almost double the annual rate of all other regions apart from the South East and East of England,” said Rob Weaver, director of investments at property crowdfunding platform Property Partner,
England’s rate of house price growth in May was above the UK average of 8.1% year-on-year, and compared to 5.9% in Northern Ireland, 4% in Scotland and 3.6% in Wales.
“Annually, house prices have continued to increase well above the rate of inflation,” said Jeremy Duncombe, director at Legal & General Mortgage Club. “What these figures really highlight is the fact that house prices have stopped rising at the heady speeds we have become accustomed to – not that they are falling.”
Beyond a couple of months’ volatility, the latest ONS figures show that the real drivers of UK property values have hardly changed, according to Andrew Bridges, managing director of Stirling Ackroyd.
He commented: “Across the country there are still too few homes to match demand, and if anything the construction of new homes is now slowing – all further strengthening the long-term prospects for investors in the UK property market.
“Particularly in London, the world is bigger than Europe and bigger than a few months one summer in 2016. The world will carry on turning and London will remain the capital of the world.”
But despite the supply-demand imbalance, Alex Gosling, CEO of online estate agents HouseSimple.com, firmly believes that it is a buyers’ market at the moment.
“What's very clear is that homeowners and prospective first time buyers will be watching the market intently over the coming months, each hoping for different outcomes,” he said. “But you suspect the ball is currently in the court of buyers, not sellers.”