UK house prices rise again in blow to first-time buyers

UK house prices rose by 1.1% in the year to April, with the average house price now sitting at £281,000, making it even harder for those hoping to jump on the housing ladder.

The Office for National Statistics said average house prices rose 1.1% in the 12 months to April, up from 0.9% in March. Average private rents rose 8.7% in May, down from 8.9% in April.

It was the second month in a row with an annual price increase, after eight months of annual price declines.

In the 12 months to April 2024, average house prices rose in England to £298,000 (an annual increase of 0.6%), in Wales to £208,000 (up 0.4%) and in Scotland to £190,000 (at 4.5%).

Average house prices rose by 4% year-on-year to £178,000 in Northern Ireland.

Read more: The Bank of England is set to keep interest rates on hold despite inflation reaching its 2% target.

Sarah Coles, head of personal finance at Hargreaves Lansdown and Yahoo Finance UK columnist, said the price rises were “putting even more pressure on first-time buyers and those hoping to get on the property ladder”.

The rise in house prices is particularly pronounced for new homes, which saw a 15.3% rise compared to a 1.3% fall in existing property prices.

Those forced to rent because they can’t afford a deposit are feeling the pinch.

Rents rose to £1,301 (8.6%) in England, £736 (8.5%) in Wales and £957 (9.3%) in Scotland in the 12 months to May. In Northern Ireland, average rents rose by 10.3% year-on-year in March.

In England, rent inflation was highest in London (10.1%) and lowest in the North East (6.1%).

In the UK, the average rent was highest in Kensington and Chelsea (£3,397) and lowest in Dumfries and Galloway (£480).

Read more: What do Labor and Tories promise on housing?

Anna Clare Harper, CEO of sustainable investment adviser GreenResi, said: “House prices rose in nominal terms by 1.1% in the year to April to £281,000. However, for most young people, this is irrelevant.

“Half of the UK population is under 40, and for most of them the important question is not ‘how fast are house prices rising?’ The question is “can I afford to live in a decent house?” And the answer for most has more to do with regulation than house prices.”

Both major parties have promised significant initiatives to support first-time buyers. Labor plans to permanently extend the Mortgage Guarantee Scheme. Introduced by the previous government, this allows lenders to pay a fee in exchange for the government underwriting the riskiest part of a mortgage.

Meanwhile, the Conservatives have set a target of delivering 1.6 million new homes by 2029, beating Labour’s pledge of 1.5 million over the same period. Achieving these targets, which require the annual delivery of at least 300,000 new homes in England alone, depends on substantial reforms to the planning system.

However, Coles warned of the potential risks of such schemes: “When you consider that the rising prices of new builds far outstrip those of existing homes, the risk of a new scheme adding fuel to the fire increases” .

Watch: How much money do I need to buy a house?

Download the Yahoo Finance app, available for Apple and Android.