House price inflation still strong, says ONS

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House prices in the UK rose by 9.8% in the year to December, according to the Office for National Statistics (ONS).

That was slightly lower than November's rate, which stood at 9.9%, but prices were still growing "strongly", the ONS said.

Prices rose fastest in England at 10.2%, and by 5.5% in Scotland, 4.9% in Northern Ireland and 4% in Wales.

The national picture was heavily influenced by London where prices went up by 13.3%.

The average UK home now costs £272,000.

House price inflation started to cool in August last year. Before that it had been accelerating since the beginning of 2012.

Even so, house price increases are far outstripping price rises in all other parts of the economy and the growth of earnings, making it difficult for most people to afford a home in many parts of the country without either a high income or very large deposit.

Campbell Robb, chief executive of the housing charity Shelter, said: "Another rise in house prices is yet another blow to the millions of people across the country with barely a hope of getting on the housing ladder, no matter how hard they work or save.

"When young people have to save for more than a decade before they can scrape together a deposit, and their only choice in the meantime is to remain stuck in their childhood bedrooms or paying out dead money to landlords, there is a serious problem."

Mortgage lending

The number of mortgage loans made to home buyers rose slightly in December with 55,600 loans arranged, 1.5% more than in November, according to the Council of Mortgage Lenders (CML).

That means the numbers of mortgages arranged for home buyers in the whole of 2014 - 677,000 - was 11% higher than in the previous year, underpinning last year's rise in both sales and prices.

Paul Smee, director general of the CML, said mortgage lending had been at its highest level since 2007, just before the financial and banking crisis.

"Improving economic conditions, boosted by government schemes like Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years," he said.

"The growth seen through 2013 and the beginning of 2014 in mortgage lending has softened in the last quarter, and we'd expect this steadying of the market to continue in 2015."

The latest data also reveals that 28% of all home sales last year were for cash only, with no mortgages involved.

Recent figures from HM Revenue & Customs (HMRC) showed that there were 1,222,600 home sales in 2014.

But the CML data shows that the total number of purchases by home-owners and buy-to-let investors involving mortgages was 874,600, or 72% of all residential properties that were sold.

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