South East drives demand
UK house prices increased by 7.9% in the year to January 2016 – up from 6.7% the month before, the ONS house price index has found.
The increase was driven by the South East (11.7%), London (10.8%) and the East (9.8%).
Stephen Smith, director of Legal & General Housing Partnerships, said: “With the cost of owning a home continuing to rise well above both earnings and inflation, the gap between supply and demand is pumping up prices and making ‘affordability’ an impossible dream for many – especially in London and the South East.
“We need to think differently about our approach to planning, building and financing housing stock in this country. Innovative ideas such as using modular homes to challenge the housing crisis should be encouraged when it comes to tackling the country’s chronic production problem which presently sees just 130,000 homes built each year, with a requirement for 250,000.”
House price inflation stood at 8.6% in England, -0.3% in Wales, 0.1% in Scotland and 0.8% in Northern Ireland.
Mark Posniak, managing director at Dragonfly Property Finance, said: “This latest annual house price data once again throws into sharp relief the contrast between the housing markets of England, Wales, Scotland and Northern Ireland. They may be geographical neigbours but they could be thousands of miles apart in terms of house prices.
"For annual prices in the South East to have out-performed London underlines an ongoing shift in demand away from the capital as people look for more value elsewhere.
"London will remain a formidable bastion of the UK's property market but for many its prices are an insurmountable obstacle.
"With interest rates unlikely to rise this year and the employment market as strong as it is, demand will remain.”
He added: “However, the strength of demand in the months ahead may well be reduced by worries about the impact of a potential Brexit, causing many would-be buyers to sit on their hands.
"The government's move against landlords, which officially starts next month, is a fundamental shift and has the potential to reshape the property market in the years ahead. We are entering a new era for property where people living in their own homes is a clear priority for the government.
"But with demand overall strong and supply so weak, prices will surely continue to rise."
