London house price rise leads property market bounce

British house prices, which had been in the doldrums since the start of the year, accelerated in April to the highest level in six months, according to figures on Tuesday from the Office for National Statistics (ONS).The house price index climbed 5.6 per cent year-on-year in April, up from a rate of 4.5 per cent in March. It was the highest growth rate since October and brought the average UK house price to £220,000 in April, some £12,000 higher than a year earlier.House price growth in London accelerated for the first time in almost a year, with a 4.7 per cent rise taking the average price to £482,779, according to the data compiled jointly by the ONS and Land Registry. "This is the first time in 11 months that the rate of price growth in London has increased," said the report.Outside London, the South East and East Anglia remained the regions with the highest average house prices, the latter recording the nation's biggest annual growth with prices increasing by 8.1 per cent in the year to April.
Across the country, first-time buyers are having to pay five per cent more for their homes than a year ago, with the UK-wide average price now standing at £185,266.Jeremy Duncombe, director of the Legal & General Mortgage Club, said the latest data illustrated the growing gap between house price inflation and affordability."First-time buyers will be the ones who largely bear the brunt of this, as they are either being forced out of home ownership or having to turn to the Bank of Mum and Dad to help find a deposit," he said."Although the general election result may bring a period of caution, our housing market has remained resilient to recent geo-political changes, with the wider economic factors being strong. We saw this through the UK’s decision to leave the European Union around this time last year."Instead, the main factor behind continued house price inflation is still the vast difference between supply and demand. Quite simply, we need to build more affordable homes to allow a greater number of buyers to take their first steps on to the property ladder."Richard Snook, a senior economist at PwC, commented: "These figures go against the recent trend of a Brexit-related slowdown that we predicted last year, but remain consistent with our guidance of two to five per cent growth in 2017 as a whole."Coinciding with publication of the ONS index was a report from the Council of Mortgage Lenders (CML) which suggested the housing market would remain "lopsided" in the coming months, with first-time buyers helping to drive momentum despite subdued buy-to-let and home-moving activity."The number of loans for buy-to-let house purchase advanced in April remained low compared to activity seen before the change on stamp duty on second properties introduced in April last year," said the report, adding that first-time buyers borrowed £4.1 billion in April, up by eight per cent on April last year.Paul Smee, director-general of the CML, said: "April comparisons are distorted by the weakness last year following the stamp duty changes, and the normal seasonal lending surge in March. But the seasonally-adjusted picture shows lending relatively unchanged month on month across all lending segments."Heading into the summer months, we expect the market to remain slightly lopsided. Buy-to-let and home-movers may well remain subdued, as they have been for the last six months. But both first-time buyer and re-mortgage lending should maintain momentum on the coat-tails of the attractive deals available."

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