House prices have risen sharply over the past year according to the UK’s largest mortgage lender.
The latest figures from the Halifax, show house prices have risen by 6.2% over the past year, taking the average cost of a home in the UK to £170,733.
Despite the sharp rise over the past 12 months, the Halifax’s figures show an increase of just 0.2% in September.
New housing bubble?
Although the average house price is still 14% below the peak in 2007, the figures are likely to be seen by some commentators, as further evidence the housing market is heading for another bubble, driven on by low interest rates and Government initiatives, such as the Funding for Lending and Help to Buy Schemes.
The news comes in the same week that David Cameron announced the second phase of the Help to Buy scheme would be brought forward from the start of 2014 to next week.
Reacting to the figures, Martin Ellis, Housing Economist at the Halifax, said: “House prices in the three months to September were 2.0% higher than in the previous quarter; slightly below the increases recorded in June, July and August. The annual rate of increase, however, continued to rise. Prices in the three months to September were 6.2% higher than in the same three months last year.”
Ellis continued: “Housing demand has risen more quickly than supply in recent months, putting upward pressure on prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy has begun a sustainable recovery. Official schemes, such as Funding for Lending and Help to Buy, also appear to have boosted housing demand.” (Source: Halifax)
Figures from the Royal Institute of Chartered Surveyors (Rics), show supply is also increasing, with the number of properties coming to the market rising in August for the seventh consecutive month. At the same time, data from builders shows the number of new homes being started is 22% higher than the same time last year.
Martin Ellis, again: “There are signs that supply is beginning to respond to the pick-up in demand, which if continued should help to constrain the upward pressure on prices. The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home, enabling more to put their property on the market for sale. Levels of house building are also increasing, albeit from a very low base”