House prices in every region of the UK have increased this year, further raising concerns that a generation of young people will fail to get on to the property ladder.
New figures from the Office for National Statistics have revealed the average UK price is now £272,000, up 11 per cent from £245,000 while the gap between house prices in the capital and the rest of the UK continues to grow.
The growth surge in July was at the fastest annual pace seen in seven years.
The average London house now costs £514,000 – up £15,000 in a month and £76,000 on a year earlier, according to July figures from the ONS.
The typical starter home is 13.5 per cent more expensive than it was a year ago and the biggest annual increase recorded since March 2005.
Critics believe a generation of young people’s dreams will go unrealised as they continue to live in their childhood bedrooms.
“This shocking rise in house prices leaves even more people priced out of a stable home,” said Shelter’s chief executive, Campbell Robb.
“The dream of their own home is slipping so far out of reach for young people and families across the country, the only choice they face is to become part of the ‘clipped- wing generation’ stuck living in their childhood bedrooms, or ‘generation rent’ paying out dead money to landlords.”
Average earnings are £24,648 a year and have been rising at just 1.7 per cent.
An English home is worth £284,000, up from £255,000 and a Scottish property has climbed to £198,000 from £183,000. The Welsh average is £171,000, up from £160,000 and Northern Ireland is £139,000, up from £132,000.
Increasingly high stamp duty charges
Those looking to buy in London face increasingly high stamp duty charges because the tax rate jumps from 3 per cent to 4 per cent for purchases above £500,000. Figures released by the Council of Mortgage Lenders (CML) last week showed that the number of mortgages handed out to first-time buyers passed 30,000 in July, marking the first time this has happened during a one-month period since August 2007.
But first-time buyers are typically having to borrow record amounts to get on the property ladder, with the average size of a new loan taken out by this sector standing at £127,500 in July, according to the CML’s data.
The current low-interest- rate environment is helping to keep borrowing costs down, but home owners have been warned to start thinking now about how they will cope with the prospect of higher payments when the Bank of England base rate eventually starts to move off its historic 0.5 per cent low.
The Royal Institution of Chartered Surveyors recently said that house sales are now typically taking up to a month longer to go through than they were at the start of the year, which it put down in part to increased lender caution.
However, property website Rightmove said this week that it is seeing signs that strong activity is set to return to the housing market this autumn.
The Housing minister, Brandon Lewis, said: “This Government is committed to delivering long-term economic stability and economic growth.
“The last administration oversaw a housing boom and bust, and we have been picking up the pieces. House building is now at its highest level since 2007 and continuing to grow, and 200,000 new affordable homes have been delivered across England since 2010.
“By tackling the deficit left by the last administration, we are helping keep down both interest rates and the number of repossessions, while improving the housing market remains a key part of our long-term economic plan,” he added.