ONS reports muted growth in UK house prices

The Office for National Statistics says that in the 12 months to August 2012, house prices in the UK have risen by 1.8 per cent. This is down from 2.0 per cent for the 12 months to July 2012.

House prices rose by 0.1 per cent on a monthly basis having been flat in July.

Across the UK, England has seen an average rise of 2.1 per cent, Scotland 0.5 per cent and Wales a 1.4 per cent increase on a year-on-year basis.

Northern Ireland has seen house prices fall by an average of 12.8 per cent over the last year.

The ONS reports that house prices have been relatively stable across the UK, apart from the big fall in Northern Ireland and that increases in London have helped to prop up prices in the rest of the UK.

Howard Archer, Chief UK & European Economist at IHS Global Insight said: “We retain the view that house prices will trend gradually lower over the final months of 2012 and early months of 2013 at least.

“Specifically, we expect house prices to drift down by around 3% from current levels in the face of persistent limited market activity, still relatively low and fragile consumer confidence, and muted earnings growth.”

House prices in London rose by 6.3 per cent. There were increases in the south-east of England and the West Midlands of 2.4 and 1.2 per cent respectively.

House prices in the south-west fell by 0.7 per cent and there were drops in house prices of 0.5 per cent in Yorkshire and Humber and the East Midlands.

Excluding London and the south-east of England house prices in the UK were unchanged in the last 12 months.

The average house price in the whole of the UK was £234,000.

First-time buyers saw an average increase of 2.9 per cent in August 2012 in the price they paid for a home compared to 12 months ago. In August 2012, the average price paid by a first-time buyer for a new house was £174,000.

Mr Archer added: “The decline in house prices should be limited by the resilience of the labour market and low interest rates, while mortgages could become increasingly available helped by the “Funding for Lending” scheme launched at the start of August by the Bank of England.”