Industry experts say the Government must address regional variations in housing market activity by providing targeted funding schemes to develop slow-growth areas.
According to the latest figures from the Office for National Statistics, average UK house prices reached £272,000 in December, up 9.8 per cent from £248,000 a year earlier.
However, England – and particularly the South-east and London – accounted for a significant portion of that growth, with English house prices rising 10.2 per cent during that period. Prices in the South East rose 11.5 per cent while London enjoyed 13.3 per cent year-on-year growth in December.
Comparatively, house prices in Wales grew just 4 per cent in that time, Scotland saw 5.5 per cent growth and Northern Ireland saw just 4.9 per cent inflation.
Experts say Government demand-side initiatives such as Help to Buy and boosting the supply of affordable housing should be targeted in those areas with lower economic activity and housing transactions.
In July last year, the £225m Scottish Help to Buy scheme ran out of funds just three months into the financial year, despite receiving an additional £50m Government injection.
That shortfall highlighted the demand for high-loan-to-value mortgages north of the border and more than 4,000 people have so far taken up the scheme. However, while Wales announced last month it is extending its Help to Buy shared equity scheme beyond the next financial year, Scotland has been slow to make the same commitment.
Homes for Scotland chief executive Philip Hogg says: “Over 4,000 properties have been purchased through Help to Buy Scotland since it was launched, clearly demonstrating the strong aspirations Scots still have to own their own home as well as boosting construction and helping to tackle the country’s chronic undersupply of housing.
“The lending slowdown in the last six months of 2014 matches with our concerns regarding the impact the interruption in Help to Buy funding has had on the home building industry and our projections that total new housing output will have been chiefly flat over the last calendar year.”
Association of Mortgage Intermediaries chief executive Robert Sinclair says: “Help to Buy in England and Wales have certain longer-term commitments. However, Scotland, Wales and Ireland are struggling to find the money to do the kind of things that are happening in England, so I think there is work that needs to be done there.
“The Government needs to take more action in terms of providing funding for those regions where housing activity isn’t up to speed. That could be to do with building more homes that people can afford, or targeting the mortgage schemes we already have to areas that require them more.”
Intermediary Mortgage Lenders Association chairman Charles Haresnape says both supply and demand-side measures are needed to boost housing market activity in the regions.
He says: “The industry has called for a proper Cabinet-appointed housing minister and I would agree that one of the key points on their agenda should be bringing the rest of the UK up to speed with the housing market recovery. Some regions are blazing ahead like the South East and London, which obviously are around the economic hub of the country.
“But in other regions there has been a really protracted and slow turnaround, which the Government should look to address by targeting funding where it needs to be. If activity levels are low, is there a need for greater help in terms of mortgage accessibility and high-LTV mortgages? Is low demand keeping prices subdued?”
London & Country associate director of communications David Hollingworth believes Government intervention must spread to wider economic development as well as the housing market.
He says: “The problem with a lot of the areas where housing market activity is subdued is the wider economic scene needs addressing. If you take the example of the North West (where prices grew just 4 per cent in the year to December) there are large areas with high unemployment, poor transport links to the major cities where jobs are – there are a variety of factors that go into a thriving housing market.
“The Government should certainly look to build more affordable homes for people in those areas where average salaries are lower, and providing greater access to schemes like Help to Buy, which it could be argued are less important in London and required more in those areas. However, regeneration really is key and while the impact of economic investment may take a longer time to reflect in the housing market, that is the most effective route of boosting the housing market in a sustainable way.”