House prices rise to £178,000 and near 2007 peak
02-29-2014
The average UK house price continued to rise this month, up almost 10pc over the last year, according to Nationwide
Photo: ALAMY
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By Nicole Blackmore
Nationwide today reported that the average UK house price has increased by 0.6pc in the last month to £177,846 – 9.4pc higher than in February 2013.
This is still around 3pc below the peak in 2007, but growth shows no signs of slowing.
The Land Registry also released figures today showing house prices rose 1pc in the month to January to £168,356, resulting in a year-on-year increase of 4.2pc.
House price indices vary significantly because some, such as Nationwide, seasonally adjust their figures and factor in location to create “representative” house prices. Earlier this month the Office for National Statistics said the average UK house price reached £250,000 in December.
Demand for properties is being driven by the record low interest rates, improved availability of mortgages and rising consumer confidence. The number of properties on the market remains limited, particularly in London and the South East, helping to push prices higher.
Robert Gardner, chief economist at Nationwide, said the number of new houses being built is still well below the pre-crisis level, which was already insufficient.
In England for example, around 109,500 new homes were built in 2013. This was 38pc below the level recorded in 2007 and around half the projected number of households that are expected to form annually in the coming years.
Nationwide said the capital has seen a huge surge in house prices thanks to a strong local economy and inward investment from overseas. Prices, which rose 15pc in 2013, are already 14pc above their pre-crisis peak, due in part to a rise in cash buyers. The share of cash transactions increased from around 20pc in 2005/06 to around 35pc in the wake of the financial crisis, although the proportion has remained fairly constant since 2008.
Graham Beale, chief executive of Nationwide, said this increase could be a function of the fact that mortgage transactions declined sharply, rather than the amount of cash transactions increasing over time.
“This reflects the impact of adverse labour market conditions and the tightening of credit conditions after 2008, which limited the number of people able to buy with a mortgage, while fewer such constraints would have applied to cash purchasers," he said.
“Interestingly, the data suggests that the share of cash purchases in London is not out of line with the rest of the UK. The fact that house prices in the capital are almost double the level prevailing in the rest of the UK presumably acts as a limiting factor.”