House Price Index Published for December 2014

23/Feb/2015

The Office for National Statistic (ONS) has published its House Price Index for December 2014.

The headline findings were as follows: 

  • UK house prices increased by 9.8% to December 2014, marginally down from 9.9% in the year to November
  • House price inflation varied across the home nations
    - England - 10.2%
    - Wales - 4.0%
    - Scotland - 5.5%
    - Northern Ireland - 4.9%
  • House prices in London again showed the highest growth and tend to drive the annual overall house price index
    - London - 13.3%
    - South East - 11.5%
    - East - 11.4% 
  • If you take London and the South East out of the statistics, UK house prices increased by 7.4% in the 12 months to December 2014. 
  • In December 2014, prices paid by first time buyers were 9.5% higher on average than in December 2013. For existing owners already in the market and trading up or down, prices increased by 9.8% for the same period. 

The report is full of statistics and interesting graphics, but one figure that is somewhat sobering is that the average UK home now costs £272,000. In January 2013 the average home cost £237,000. (Interestingly, this actually varies between new and ‘second hand’ homes. The average UK house price for new build properties in December 2014 was £260,000).

Of course, this is the UK average. When you compare the average house prices region by region you can see that in Northern Ireland, the North East and Yorkshire and Humber, for example, average house prices are more modest. The national average is skewed by London, which, in terms of house prices, far outstrips the rest of the country. 

Another interesting statistic from the report relates to mortgage lending and the data for this report is actually collected from mortgage financed transactions collected via the Regulated Mortgage Survey. This survey is carried out by the Council for Mortgage Lenders (CML). According to the CML, the actual number of mortgage loans made to home buyers rose slightly in December with 55,600 loans arranged, 1.5% more than in November. That means the numbers of mortgages arranged for home buyers in the whole of 2014 was 677,000 - 11% higher than in the previous year, and so, for 2014, mortgage lending was at its highest level since 2007, just before the financial and banking crisis.

The number of all residential transactions is published by HM Revenue & Customs (HMRC) and shows that the total number of transactions for the UK in 2014 was 1,222,600. When you consider that the CML’s own statistics for the total number of purchases by home-owners and buy-to-let investors involving mortgages was 874,600, you can see that just under 30% of all home purchases last year were ‘cash’ purchases, where no mortgage was required. 

All the sales involving lending will have required a valuation carried out by a surveyor on behalf of the lender, but up to 30% of properties could be bought without any surveyor involvement at all. Potentially, some purchasers are buying homes blind – oblivious to the expensive defects lurking behind the skirting board and under the carpet. For many purchasers, the opportunity to save a bit of money by not having a survey must be very tempting, but with so much of the UK housing stock consisting of older properties, surely this must be a false economy. 

If you are buying a home, and you are in the enviable position of not needing to take out lender finance, you should give serious consideration to a survey. To find a surveyor near you, click here to view our database of qualified surveyors. At the very least this will buy you peace of mind, but in the majority of cases investing in a survey will be money well spent in that, equipped with a survey as a bargaining tool, many buyers are able to renegotiate the purchase price of the property they want to buy. 

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