House prices in England now at record high

Posted by Arron Dickens in Credit Crunch on 18 September 2013 - Arron is a Product Manager at checkmyfile

According to figures from the Office for National Statistics (ONS), the house price index for England is now at its highest level ever. The previous peak came before the financial meltdown in January 2008- the current level stands at 0.9% higher. The last year has seen accelerating recovery for house prices, with annual prices rises for July standing at 3.3%, up from 3.1% just a month earlier.

This does not tell the whole story, as expected the figures are highly distorted by massive increases in London and the South East. While annual prices are up by nearly 10% in London, prices outside of the South East are only up about 1%. When looking outside of England, prices are still falling in Wales and Scotland.

If inflationary effects are taken into account, London is the only place seeing price rises at the moment, indicating that we are still some way from the pre-recession ‘boom’ in the housing market. Other statistics suggest the same, with total numbers of mortgage approvals and transactions still a long way from the peak seen in November 2007.

Looking forward, the property website Rightmove has raised its growth forecast for the whole of 2013 to an average price rise of 6%. This triples their original estimates for 2013, with the site originally forecasting a 2% rise, increasing this to 4% a couple of months ago. The company now believes prices have increased by 4.5% so far this year, with Halifax stating this figure is even higher, at 5.4%. Increasing forecasts to a yearly rise of 6%, just shows how fast prices are now accelerating, and could indicate we are heading for another house price bubble.

The Royal Institution of Chartered Surveyors last week called for a 5% cap on annual house price growth to stop any possible bubble from occurring. Quite how this will be achieved is difficult to ascertain, but it has been suggested that there should be cap on the loan to value (LTV) that mortgage lenders will be allowed to offer to buyers.

Arron Dickens is a Credit Analyst at checkmyfile and has a Bachelor of Arts degree in Business Administration and is an Associate of the Institute of Credit Management. He can be contacted at

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