House price surge alarms first-time buyers
House prices increased by 2.6% in the year to April 2013, according to new figures released by the Office for National Statistics (ONS), taking the average price of a home in the UK to £238,000.
The data, which also showed a monthly increase of 0.4% during the month, points to continuing improvement in the housing market. But some housing experts said the figures paint a worrying picture for first-tine buyers.
Across the UK, annual growth of 2.8% was experienced in England and 6.2% in Wales, but these gains were offset by declines of 1.2% in Scotland and 0.8% in Northern Ireland.
The ONS said house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average.
London put on 6% in the year to April, taking the average price of a home to £414,000 – 18% above the average London price at the pre-recession peak in January 2008.
In April 2013 the average price paid for a home by first-time buyers was 4.7% higher than April 2012, outstripping the overall increase in house prices of 2.6%.
It means that during April 2013, first-time buyers paid an average of £179,000 for their first home, or £8,400 more than they did in April 2012. At £179,000, first-time buyers would need to raise 7.7 times the average annual salary in order to afford a home.
Duncan Stott of first-time buyer pressure group PricedOut said: "Today's inflation-busting price increases mean first-time buyers now have an even greater mountain to climb to realise their dreams of owning their own home. It is especially distressing to see first-time buyer prices increase by so much, suggesting that it is particularly the lower end of the housing market that is over-heating."
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).