House prices in the UK are rising at the fastest rate since June 2010, according to the latest figures from the Nationwide House Price Index.
The UK’s largest building society has reported house prices grew by 1.4% in December and were up 8.4% on the same time last year. The Nationwide’s figures show the value of the average home in the UK is now worth £175,826, still around 5% below the 2007 peak, despite the strong surge in 2013.
Low interest rates
The Nationwide attribute the large increase in house prices during 2013 to a number of factors, including:
- The improved economic outlook
- Falling unemployment
- Initiatives such as the Help to Buy and Funding for Lending schemes
- A lack of supply with the number of news homes being built down by over half compared to the levels seen before the financial crisis
Low interest rates are also a crucial factor, Robert Gardener, Chief Economist at the Nationwide, commented: “Affordability is being supported by the ultra-low level of interest rates. A typical mortgage payment for a first time buyer is currently equal to around 29% of take home pay, close to the long term average. However, the risk is that if demand continues to run ahead of supply in the quarters ahead, affordability may become stretched. House price growth has been outstripping average earnings growth since the middle of the year.” (Source: Nationwide)
The figures are at odds with the latest data released yesterday by the Land Registry, who reported annual house price inflation was running at just 3.20%. With the Halifax due to report their figures for December in the coming days, time will tell whether their data backs up the Nationwide or the Land Registry.
All regions see increases
The Nationwide also report that increases to house prices have become “increasingly broad based” over the past 12 months, with all parts of the UK seeing an increase in prices over the past two quarters.
As usual London and the South East led the way, whilst the North of England and Scotland have seen the smallest increases.