Nationwide House Price Index: Prices close in on 2007 peak

House Prices

Nationwide House Price Index: Prices close in on 2007 peakThe latest Nationwide House Price survey shows that house prices are no close to their 2007 peak.

According to the country’s largest building society, house prices rose by 0.6% in February and are up 9.4% on the same time last year.

The survey shows that the average property is now worth £177,846.

This is the 14th consecutive month house prices have risen and the pace is increasing, which will lead to the inevitable warnings that a further housing bubble is being created.

Why are house prices rising?

Experts attribute the sharp increase in house prices to a number of factors, including:

  • Low interest rates, which no show no sign of increasing in 2014 after the Bank of England reviewed the ‘forward guidance’ policy
  • The economic recovery, which has boosted consumer confidence
  • Falling unemployment
  • Government initiatives such as the Funding for Lending and Help to Buy schemes

Looking at other factors, Robert Gardener, Chief Economist at the Nationwide, said: “Price growth is being supported by the fact that the supply of housing remains constrained, with housing completions still well below their pre-crisis levels, which was already insufficient to keep up with the pace of household formation. For example, in England around 109,500 new homes were built in 2013, this is 38% below the level recorded in 2007 and around half the projected number of households that are expected to form each year in the years ahead.” (Source: Nationwide)