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House prices rise to record high as Osborne’s ‘project fear’ forecast of major fall fails to materialise

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Sales volumes in December – the last month for which data is available – fell by 31% in London and by 19% across England as a whole compared with a year ago, the Land Registry has reported.

In December, there were 65,064 sales in England, compared with 80,367 the year before.

It also said that average house prices rose across the UK by 5.8% in the year to February to stand at £217,502 – a record high and putting paid to ex-Chancellor George Osborne’s ‘project fear’ forecast that they would tumble 18%.

However, the headline figure hides some interesting variations: new-build homes rose in price by almost 20% over the year, and by 6.3% on a monthly basis, to stand at £289,682. In contrast, secondhand homes rose in price annually by 4.8% and on a monthly basis by 0.2%, to reach £212,870.

The Land Registry does, however, note that its first estimate for new-build prices is based on a small sample.

The UK average house price also disguises big regional variations measured on a monthly basis.

Average house prices fell in Scotland (by 0.6%), Wales (0.9%) London (0.9%), the north-east (0.1%) and the south-east (1%), but rose markedly in Yorkshire and the Humber (by 2.5%), east midlands (2%) and the north-west (1.8%).

Paul Smith, chief executive of Spicerhaart, said: “House prices today prove unshakeable, as home buyers are now paying 1.3% more for their homes than they were pre-Brexit.

“It is a far cry from the 18% drop in house prices that George Osborne predicted.”

Separately, the Council of Mortgage Lenders released data for February, showing that transactions may be on the pick-up: there were 48,600 home-buyer mortgages in February, up 7% on a monthly basis and 2% on February last year.

Of that total, 24,200 loans went to first-time buyers, up 7% from February last year. The number of house purchase loans to home movers was also up, by some 6%.

Buy-to-let house purchasing activity nearly halved over the year, with just 5,700 house purchase loans to buy-to-let investors.

Number of loans for house purchase and remortgage in February

House purchase Remortgage
FTBs Movers Buy-to-let Home owners Buy-to-let
February 2016 21,800 25,900 10,300 28,500 13,200
January 2017 22,600 23,000 5,900 40,200 13,900
February 2017 24,200 24,400 5,700 31,000 11,600
1 month change +7.1% +6.1% -3.4% -22.9% -16.5%
12 month change +11.0% -5.8% -44.7% +8.8% -12.1%

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Source:: House prices rise to record high as Osborne’s ‘project fear’ forecast of major fall fails to materialise