UK house prices up 8% in a year, says ONS

Houses Activity in the housing market varies in different parts of the country

UK house prices rose by 8% in the year to the end of March, official figures show, as the prime minister says he will consider changes to Help to Buy.

The annual increase slowed compared with a 9.2% year-on-year price rise to the end of February.

However, the latest official data from the Office for National Statistics (ONS) showed that the annual property price increase in London stood at 17%.

Excluding London and the South East of England, prices were up by 4.7%.

The wide range of activity was shown with prices in Northern Ireland increasing by 0.3% on a year-on-year basis, and by 0.8% in Scotland.

Help to Buy (mortgage guarantee)

houses
  • Covers all UK
  • Covers "second-hand" homes up to £600,000
  • Began October 2013.
  • Ends December 2016.

In the East of England, property prices were up by 6.6% annually, and by 6.1% in the South East of England.

Help to Buy

The ONS said that prices fell by 0.5% in March compared with February, matching other surveys, making the average home worth £252,000. This was the first month-on-month drop for over a year.

However, house price data from the Halifax and Nationwide, based on their lending, have also shown fairly sharp rises in prices on average over the last year, despite the regional differences.

This has prompted some commentators to call for the second phase of the government-backed Help to Buy scheme in the UK - which supports new homebuyers who might have struggled to get a mortgage - to be scaled back.

Prime Minister David Cameron told the BBC: "Of course, we will consider any changes that are proposed by [Bank of England governor] Mark Carney.

Start Quote

An unaddressed bubble in London will pump up bubbles in adjacent regions, as buyers feel compelled to look for value and affordability elsewhere”

End Quote

"But, as he said, this is a well-targeted scheme and it has helped tens of thousands of people get on the housing ladder and to have mortgages."

The shadow chancellor, Ed Balls, said the Help to Buy scheme was simply too high: "We've said it should come down much closer to average house prices. A number below £400,000 would make much more sense than £600,000 which is far too big a house price for the taxpayer to be guaranteeing mortgages. "

The Treasury minister - Andrea Leadsom - said there were a number of issues for the government to consider: "The thing is it's a fine balance. In London prices are rising quite fast. In the rest of the country - and in the country as a whole - they remain 15% in real terms below their pre-crisis peak. "

Rate fear

Mr Carney said he was watching the housing market closely. Although there was a shortage of homes, which the Bank could do nothing about, it did have influence on lenders and would tell the chancellor if changes needed to be made to the government's housing market schemes.

Mortgage rules have been altered recently, that is thought to be lengthening the time it takes to get a home loan. This has reduced the number of mortgage approvals in recent weeks.

The Bank of England also has the power to control interest rates, and a separate report suggests a rise in the Bank rate could hit hundreds of thousands of mortgage holders hard.

BBC housing calculator

Renting example
  • Lets you see where you can afford to live - and if it would be cheaper to rent or buy
  • Enter how many bedrooms, which end of the market and how much you want to pay each month
  • As you move the payment slider, parts of the UK light up to show you where you can afford
  • Based on pricing and rental data from residential property analysts Hometrack

The Resolution Foundation estimates that 770,000 vulnerable households could be "imprisoned" by a limited ability to switch to another mortgage deal were interest rates to rise. That represents about one in 10 mortgage holders in the UK.

The Bank rate is at a record low of 0.5%, but analysts are predicting a rise in the rate at some point in 2015.

"Many borrowers have enjoyed spectacular savings over recent years, with mortgage rates falling to historic lows, and most will be able to ride the tide of gradually rising interest rates," said Matthew Whittaker, chief economist at the Resolution Foundation and author of the report.

"But for around one in four, even modest rate rises could create financial difficulties. Those at greatest risk are members of this group who also find themselves unable to access the best deals in the market today.

"Almost one in 10 households are doubly exposed: facing the prospect of their mortgage becoming increasingly unaffordable in the future and with the market offering them limited, if any, choice today."

The report suggested that homeowners in London and eastern England were most exposed to an interest rate rise.

The cost of living, as measured by the Consumer Prices Index, rose to 1.8% in April from 1.6% in March. This was the first rise in inflation for 10 months and pushed the annual change in prices slightly higher than the annual change in average earnings.

More on This Story

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

BBC Business Live

  1.  
    HEADLINES
     
  2.  
    11:53: Via Twitter Kevin Peachey Personal finance reporter, BBC News

    tweets: "Perforated car tax discs are history, shortly before the end of paper tax discs altogether #accidentalrip"

     
  3.  
    XAAR SHARES 11:48:
    Tiled boardroom wall

    Shares in Xaar are a notable faller. They're down by 25%. It is an industrial inkjet company. The shares have dropped because "demand from the ceramic tile decoration sector has softened, which we believe relates to a slowdown in construction activity in China". The process is explained here in this handy vid.

     
  4.  
    MALAYSIA AIRLINES 11:38:
    Malaysia Airlines plane

    The shares are expected to be suspended for the day, with restructuring details given in the afternoon. Some routes are likely to be axed and about a quarter of its 20,000 staff may see their jobs go.

     
  5.  
    MALAYSIA AIRLINES 11:23:

    Reuters is reporting that Malaysia Airlines' shares will be suspended on Friday ahead of its planned restructuring. The airline has seen booking plummet since the mysterious loss of one of its planes and the shooting down of another over disputed Ukraine.

     
  6.  
    UK ECONOMY 11:11:

    The British Chambers of Commerce says the UK economy looks set to grow at its fastest rate since 2007 this year - although it says this pace isn't likely to be kept up. It's the latest in a queue of forecasters who have upped their expectations for growth this year - the BCC says it will be 3.2%, up from a previous guess of 3.1%.

     
  7.  
    DEUTSCHE BANK FINED 10:59:

    Deutsche Bank's mistake was a howler. "The error was due to a coding issue which reversed the buy/sell indicator for all equity swap CFD transactions," says the FCA. All 29 million of them.

     
  8.  
    DEUTSCHE BANK FINED 10:56:

    The bank is the 11th to be fined for poor reporting to the authorities. The FCA gives it a very public slap in the face: "We are particularly concerned because we have provided extensive guidance to firms on how to submit and check these reports, and previously issued Deutsche with a private warning in relation to other similar transaction reporting failures."

     
  9.  
    DEUTSCHE BANK FINED 10:50:

    The FCA is very cheesed off indeed with Deutsche Bank. The bank failed properly to report 29 million, yes 29 million, of these deals. "There is simply no excuse for Deutsche's failure to get this right," thunders the FCA.

     
  10.  
    DEUTSCHE BANK FINED 10:47:

    Another day, another bank fine. Deutsche Bank in London has been fined £4.7m by the Financial Conduct Authority (FCA). Its crime was to incorrectly report transactions between November 2007 and April 2013 involving "contracts for difference" - a derivative that lets people bet on share price movements.

     
  11.  
    KITTY NOT CAT 10:20:
    Kitty visa card

    With something of a jolt, Business Live stumbles on this story from our youthful colleagues at Newsbeat. Japanese top icon Hello Kitty is not a cat. An anthropologist from the University of Hawaii who is organising an exhibition about the cartoon character, says owners Sanrio got in touch: "That's one correction Sanrio made for my script for the show. Hello Kitty is not a cat. She is a little girl." And, incidentally, an English one, she was told.

     
  12.  
    FUNDING FOR LENDING 10:06:

    It is worth noting that the raison d'etre of the FLS scheme may have expired. As the bank pointed out earlier this month, overall bank lending to non-financial businesses rose slightly in the second quarter of the year. That was the first such increase since 2009 and the bank expects it to keep on improving.

     
  13.  
    FUNDING FOR LENDING 09:49:
    Money

    Figures from the Bank of England show that its Funding for Lending Scheme, which has revived the mortgage industry, has still not increased lending by participating banks to small, medium sized, or large businesses. The Bank says in the second quarter of this year, banks and building societies borrowed a further £3.2bn from it under the scheme. But in fact lending by those banks to their business customers shrank again, by a further £3.9bn.

     
  14.  
    FRACKING CASE 09:29:

    Frackers have some backers. A court will hear a case later from farmers and landowners trying to evict anti-fracking protestors from sites in Lancashire. The group of 10 landowners say the protests on sites at Little Plumpton and Rosacre Wood have been affecting business. Their legal action is being supported by the shale gas company Cuadrilla.

     
  15.  
    MARKETS UPDATE 09:09:

    European shares have opened lower. The FTSE 100 is down 15 at 6,815. Frankfurt's Dax is 64 lower at 9,505 and Paris's Cac 40 is down 17 at 4,378. London shares are lower after key mining companies' shares fell in response to a fall in the price of iron ore in China. The pound is not much changed at $1.6585 and at 1 euro 25.56.

     
  16.  
    RUSSIAN HACKING? 08:50:

    Our World Service colleagues are reporting that the FBI is investigating reports that Russian-backed hackers are suspected of launching a co-ordinated attack on American banks' computer networks. The FBI says it is trying to find out whether the attack on JP Morgan, one of the biggest US banks, along with four other financial institutions, was in retaliation for sanctions against Russia. The hacking is reported to have involved the theft of sensitive customer data.

     
  17.  
    PADDY POWER 08:29:
    David Moyes statue outside Anfield

    The betting business says it has experienced a record 35% rise in the number of new customers at 795,000 more punters. It says it has done this without increasing spending on marketing. Spending on stunts, however, included these: "We put an 'In case of emergency break glass' encased Alex Ferguson wax model outside Old Trafford... and erected a giant bronze statue of Moyes for services rendered - outside Anfield before the Liverpool versus Chelsea showdown."

     
  18.  
    AEROFLOT RESULTS 08:18:
    Aeroflot

    More airline news. Russia's state-controlled Aeroflot reports a loss of 1.9bn roubles (£35m) for the first half of 2014. That compares to a 45m rouble profit a year ago. The slowdown in the economy and a fall in the value of the rouble against other world currencies are among the reasons.

     
  19.  
    QANTAS 08:03:
    Kangaroo

    Shares in the Flying Kangaroo are up 7.3% at A$139 in the wake of its hefty loss. "We are focused now in the short to medium term on the transformation program," said chief executive Alan Joyce. "We are not actively out there looking for an airline investor." Investors are actively buying its shares though - a new law is opening the doors to foreign investment in the international arm of the airline.

     
  20.  
    AA RESIGNATIONS 07:48:
    AA logo

    There seems to be some upheaval at the top of the AA. Its chief executive Chris Jansen is resigning immediately. The chief financial officer Andy Boland is leaving too.

     
  21.  
    ICE SALES 07:39: Radio 5 live
    Alex Brown of Exeter Chiefs takes part in the Ice Bucket Challenge

    The charity ice bucket challenge appears to be boosting the sale of ice cubes. Tesco says they're up 20%. Paul Doughty, managing director of The Ice Company told Wake up to Money his firm had been busy restocking supermarkets - which saw big sales last weekend. But he explained that this was a bit of a challenge. "At this time of year, we are actually ramping down production, sales get run down over the summer, and we start to reduce our staffing levels in our factories through August."

     
  22.  
    LIVING WAGE 07:31:

    What is is? It is set at £8.80 an hour for London and £7.65 for the rest of the UK. Find out here. The minimum wage - the government's base line, is £6.31.

     
  23.  
    PADDY POWER 07:26:
    Paddy Power pic from website

    Betting giant Paddy Power says pre-tax profits are down 13% at £62m for the first half of the year. The company says many football punters had "dream weekends" in January and March, with 16 and then 17 teams of the 21 most backed winning. "This proved costlier than John Cleese's divorce", says Paddy.

     
  24.  
    HAYS RESULTS 07:16:

    Profits have risen at the recruitment business Hays, which operates in 33 countries. Profits rose 12% in the past year to £132m. Dividends are up 5%. "In many of our global markets, the vast majority of professional and skilled recruitment is still done in-house, with minimal outsourcing to recruitment agencies which presents substantial long-term structural growth opportunities," the company said.

     
  25.  
    LIVING WAGE 07:05: BBC Radio 4

    On the TUC Living Wage story: TUC general secretary Frances O'Grady tells Today that women come off worse because there is low value attached to the jobs women tend to do, such as care working and shop work.

     
  26.  
    LIVING WAGE 06:53: BBC Radio 4
    Care worker

    Today is discussing the Living Wage concept. In many parts of Britain, women working part-time earn less than the Living Wage, says the TUC. Three quarters of part-time women workers in Lancashire do, as do two thirds of part-time women workers in West Somerset. TUC chief Frances O'Grady explains: "The minimum wage is an absolute floor, the Living Wage is the level that means you can take your children on holiday for a week - nothing fancy." The minimum wage is £6.31.

     
  27.  
    QANTAS 06:42:

    Can Qantas solve its huge financial problems? The BBC's Phil Mercer in Sydney says: "The airline's annual accounts have become a horror story of decline as it tries to chart a path back to profit and sustainability". Read more.

     
  28.  
    MALAYSIA AIRLINES 06:32: BBC Radio 4

    Can an airline survive two major plane disasters in a single year? Today says that's the question for Malaysia Airlines. Those who have flown on the airline recently report near empty cabins. Can Malaysian Airlines survive? David Learmount from Flightglobal thinks so. "Malaysia will be given a chance by the government and it will be given some money. People don't like seeing airlines go bust," he told Today listeners.

     
  29.  
    BUSINESS LENDING 06:22: Radio 5 live

    Wake Up to Money looks forward to later this morning when the Bank of England will give us an update on its Funding for Lending scheme - introduced two years ago to encourage banks to lend to small businesses. It's not been a rip-roaring success: a previous report said, despite all that help, the amount of money being lent was down £2.7bn over the first three months of this year.

     
  30.  
    QANTAS 06:12:
    A Qantas Airline plane gets takes off at Sydney Airport in Sydney on August 28, 2014

    Overnight Australia's national airline Qantas reported a huge loss of A$2.8bn for the past year - its biggest ever. That was partly due to writing down the value of its planes by A$2.6bn. Qantas added weak domestic demand, poor consumer spending and rising fuel costs also contributed. Chief executive Alan Joyce tried to put some gloss on the figures: "There is no doubt today's numbers are confronting... but they represent the year that is past".

     
  31.  
    SCOTTISH INDEPENDENCE 06:03:
    Saltire

    Pro-independence business people in Scotland have hit back. 200 of them have signed a letter, appearing in the Herald online, saying that the business case for independence "has been made - and it's strong and ambitious". They add: "The real threat to Scotland is the real possibility of a British exit from the European common market".

     
  32.  
    Rebecca Marston Business reporter, BBC News

    The monitor has been fitted and off we go. You can plug in to us bizlive@bbc.co.uk or @bbcbusiness. Here until 13:00.

     
  33.  
    06:00: Ian Pollock Business reporter, BBC News

    Good morning, the Business Live page will have its finger on the business pulse, just for you.

     

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.