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Which year beat 2014 for house price rises? The past 12 months saw the second highest property inflation since 1980

House prices rose as quickly in 2014 as in almost any other year since 1980, according to analysis of official house price data that shows UK prices fell annually in just seven of the 34 years since then.

A report into changing rates of homeownership from the Office for National Statistics today confirms that price rises last year are likely to be second only to those in 1988, when the average price of a home rose 12 per cent.

The ONS figure for December is not yet in, but it's data for November put the average UK home at £271,000, or 10 per cent higher than the same point a year before.

Since 1980, prices have fallen in only seven distinct years. 

Most of these came during the recession of the early 1990s. 

The biggest drop, however, was 7.6 per cent in 2009.

Property values increased by an average of 6.9 per cent a year since 1980 to reach an average of £242,000 in 2013, the last year for which full-year figures are available. 

The ONS report into property ownership during the last 33 years also shows a huge decline in first-time buyer numbers.

Between 1980 and 2002 the number of mortgages agreed for first-time buyers averaged 486,000 per year. 

However, the numbers suffered sharp falls since then, notably in 2003, when first-time buyers fell 31 per cent, and 2008, when the number fell 47 per cent.

This has had a negative effect on rates of home ownership. In 1991, 67 per cent of the 25-34 age group were homeowners. By 2012, this had declined to 43 per cent.

For those aged 16-24, 36 per cent owned a home in 1991 versus 10 per cent in 2012, while the fall for 35-44-year-olds was from 78 per cent to 64 per cent.

The ONS says a huge factor in the decline is the rise in deposits required to secure a mortgage.

For first-time buyers, the average deposit as a percentage of the purchase price increased by almost 10 percentage points between 1988 and 2013, from 12 per cent to 22 per cent.

A separate report from housing charity Shelter today showed it would take more than a decade for a young household to save for a deposit in 70 per cent of counties across England.

Couples living in London need to wait almost 26 years before they can have enough for a deposit, while single people face a 29-year wait because of runaway prices.

The research looked at how long it would take three types of buyers aged in their 20s to save up for a 20 per cent deposit.

The calculations assumed that those trying to get on the property ladder had no prior savings and that they saved around one fifth of their incomes after taxes and essential spending on costs such as food, childcare, transport and rent. Variations in local incomes and house prices were also taken into account.

It comes despite the Government's flagship Help to Buy scheme, launched in 2013, which aims to help first-time buyers a chance to get onto the housing ladder with a deposit of just five per cent.

Another report out by the Council for Mortgage Lenders this morning showed more than 300,000 people took their first step on the property ladder last year, marking the highest number of first-time buyers seen since 2007.

In total, an estimated £205.6billion-worth of mortgages were handed out last year to all types of borrower, marking the largest amount lent since 2008.

However, there have been some recent suggestions that conditions are getting tougher for would-be first-time buyers.

Stricter mortgage lending rules came into force last year in the form of the Mortgage Market Review, which means borrowers are stress-tested to see if they could afford repayments if they increased to seven per cent.

Furthermore, a recent Bank of England report found mortgage lenders have become less willing to lend to people with deposits of less than 10 per cent.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: 'While first-time buyers have been a key driver of the market last year, we expect the remortgaging market to be strong over the next 12 months with borrowers not so much fearing a rate rise but enticed by some of the astonishingly cheap deals now available.

'With 10-year fixes now available from just 2.94 per cent, an exceptionally cheap deal for such certainty, more and more borrowers will be tempted to commit for the longer term. The next step is for lenders to start easing criteria rather than cutting rates, a move we hope to see this year.' 

ONS figures show the typical price paid by a first-time buyer for a house was £208,000 last November, which is 11 per cent more than it was at the same point last year.

Source:  thisismoney.co.uk

Sam: 12th Feb 2015 14:35:00

 

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