UK Home Prices Report Yearly Increase

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Home prices in the U.K. increased by 2.6 percent in April from the previous year, with London outpacing the rest of the country, according to data from the Office for National Statistics released today. 

The year-over-year increase showed a 2.8 percent increase in England and 6.2 percent increase in Wales. They were offset by a 1.2 percent decrease in Scotland and a 0.8 percent decrease in Northern Ireland. (Although prices are declining at a slower pace in Ireland.)

Overall, the U.K. housing market is on the recovery track, with the London market as the frontrunner, data shows. Demand for housing in London is expected to outpace supply, causing home prices to continue their upward trend. 

The average home price in London increased by 6.0 percent to £414,000 in April from a year earlier, compared to the average of £238,000 for the U.K., according to the ONS. 

The U.K. housing market has received a boost from government programs aimed at increasing lending and mortgage availability. 

"Schemes like Help To Buy and Funding For Lending have acted like a alprostadil injection for the mortgage market and made it markedly stronger than last year," David Newnes, director of LSL Property Services, told the Financial Times. 

But average incomes are not keeping pace with the growing average price for homes, economists say. Combining that with people's hesitancy to sell for fear of losing potential profit is resulting in first-time home buyers facing a difficult time entering the property market. 

In April, the average home price paid by a first-time buyer in the U.K. was £179,000, a 4.7 percent yearly increase, the ONS reports. For existing owners, the average price was £273,000, representing a 1.9 percent yearly increase. 

Another measure showing a recovery trend for the housing market is the recent report from Rightmove showing a 1.2 percent increase in U.K. home sellers asking prices, pushing values to higher than £250,000 for the first time, Bloomberg reports.