According to the Office for National Statistics (ONS) UK house prices increased by 12.1% in the 12 months to September.
Marking the largest annual growth since July 2007, the growth has now exceeded previous peaks in the market.
Average house prices up
The average house price now stands at £273,000, up from the £245,000 recorded in September 2013.
When compared to last year, typical first-time buyers now have to pay around 13.3% more to get onto the property ladder. On average, first-time buyers will now need to pay £209,000 to purchase their first property.
London leads the pack
By no surprise, property values in London have seen the highest increase. ONS revealed that the average value of a property in the capital increase by 18.8% over the last year to reach £508,000.
Despite the annual increase, property prices seem to be cooling however the average house price is now almost 10 times the average wage.
A cooling market
On a monthly basis, prices were up by 0.5% between August and September marking a smaller rise than the 0.8% recorded in the previous index.
House prices in England and Scotland have surpassed their pre-economic crisis levels of 2008 however prices have declined slightly when compared to August’s peaks.
Tighter mortgage lending – which came into place in April – has been blamed for the disruption to the market.
The “rent trap”
With many first-time buyers now priced out of the market, there has been a surge in landlords snapping up available properties for the buy-to-let sector.
According to Paragon Mortgages, buy-to-let mortgage lending could reach £25 billion this calendar year – up from the £20.7 billion recorded by the Council of Mortgage Lenders last year.
It seems that landlord sentiment is positive towards the buy-to-let market with many investors seeing stable rental returns from their investment.