House prices continue to rise steadily. Prices in the three months to June were 2.1% higher than in the previous quarter, edging above the 1-2% range recorded throughout the first five months of the year. The annual rate is at its highest for nearly three years with prices in the three months to June 3.7% higher than in the same three months last year.

"Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase – a leading indicator of sales – increased in May.

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"Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices. The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates. There are also early indications that the Help to Buy: equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013."

Key facts

  • House prices in the second quarter of 2013 (April-June) were 2.1% higher than in the first quarter of the year (January-March). As a result, house price growth between the latest three months and the preceding three months edged above the 1-2% range that it had been in throughout the preceding five months. This was the biggest increase on this measure since January 2010 (2.9%).
  • Prices in the three months to June were 3.7% higher than in the same three months a year earlier. This was the biggest increase in this annual measure since August 2010 (4.6%).
  • House prices increased by 0.6% in June. This was the fifth consecutive monthly rise.
  • Activity is also picking up. The number of mortgage approvals for house purchases – a leading indicator of completed house sales – increased by 7% between April and May to 58,200; the highest monthly level since December 2009. Approvals in the three months to May were 2% higher than in the previous three months. (Source: Bank of England, seasonally-adjusted figures). Home sales in May were the highest in any month since March 2012 when there was a rush to beat the end of the stamp duty holiday for first-time buyers on properties priced below £250,000. (Source: HMRC, seasonally adjusted figures)
  • Supply conditions remain tight. The stock of unsold properties remains relatively low and was 5% lower on an annual basis in May 2013, according to the latest figures. (Source: RICS).

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