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First-time buyers hit by rising house prices in January

City A.M. Reporter
FIRST-time buyers were faced with house prices 8.9 per cent higher in January than the same month last year, according to figures from the Department of Communities and Local Government (DCLG).

The department said average prices paid by those buying their first home was £149,924 in January. This was up 0.2 per cent against December and was part of a general rise in UK house prices. Mortgage lenders continue to insist on stringent criteria being met by homebuyers, including requiring a significant deposit from new borrowers.

The DCLG said average UK house prices were 2.2 per cent higher in January than in December, with the typical home costing £207,159 – a rise of 6.2 per cent on January 2009.

However, the DCLG information is at odds with more recent updates from the Halifax and the Nationwide revealing prices fell for the first time in months during February.

“The lagging nature of the DCLG data means that it does not fundamentally alter our belief that house prices will be erratic and prone to corrections in 2010, and will probably be no better than flat over the year,” said Howard Archer, chief UK economist at IHS Global Insight.

Financial Services Authority figures for the fourth quarter also released yesterday showed both arrears and repossessions continuing to fall, reflecting both the low level of interest rates and a general reluctance by lenders to push aggressively to take back properties without exploring every avenue to avoid such an outcome.