House prices rose by £3,000 in June, pushing property values up to a new record high, government figures showed today.
The average cost of a UK home increased by 0.4 per cent during the month, as the housing market continued to gain momentum following May’s General Election, according to the Office for National Statistics.
Annual house price inflation also edged up slightly to 5.7 per cent, although it remained well down on the rate of 10.2 per cent recorded in June last year.
Growth was strongest in the east, with property values rising by 9.2 per cent during the year to the end of June, followed by Northern Ireland at 9 per cent.
Prices rose by 7.7 per cent in the south east, while they were up 6.4 per cent in the East Midlands.
But the rate at which property values are rising remained subdued in London, increasing by just 5.3 per cent in the past year.
At the same time, the average cost of a home in Scotland fell by 0.6 per cent during the period, while in Wales prices edged ahead by just 0.8 per cent during the year.
London continued to have the highest house prices at £513,000, with the capital, south east and south west the only regions where typical property values were above the UK average.
At the other end of the scale, prices were lowest in Northern Ireland and the north east, where the typical home costs £154,000 and £156,000 respectively.
House prices are being forced up by a mismatch between supply and demand.
Recent figures from the Royal Institution for Chartered Surveyors (RICS) showed that the level of homes for sale had reached a record low in July, while the number of potential buyers increased at its fastest rate since February last year.
But demand may be dented when interest rates start to rise, worsening already stretched affordability levels.
Bank of England Governor Mark Carney recently warned that the official cost of borrowing could rise at the turn of the year.
However, figures released today showed inflation rose to just 0.1 per cent in July, prompting speculation that the first rate rise could be further off than previously thought.
Samuel Tombs, senior UK economist at Capital Economics, said: “With inflation muted and another wave of austerity set to hit the economy, we still think the MPC will hold off from raising interest rates until the second quarter of 2016 and will increase Bank Rate to just 1 per cent by the end of next year.”Posted on : Aug, 19 2015