House Prices Increase at Fastest Rate Since 2010

July 15, 2013

Luke-Notley small (Custom)A monthly index by Nationwide building society has shown that house prices increased by 0.3% in June, rising at an annual rate of 1.9%. This is the quickest annual increase since September 2010.

The index showed that the average price of a home in the UK is now £168,941. The data also revealed that there are strong regional differences, with the South East and London having the fastest rates of house price growth. The average price of a home in London is now £318,214, which is 5% above the figure recorded in 2007. In the UK as a whole, house prices are 9% below their pre-crisis level.

Nationwide found that the gap between house prices in London and the rest of the UK is the widest it’s ever been, both in cash and percentage terms.

Jonathan Hopper, managing director of property search consultants Garrington, said: “For prices in the capital to be 5% above their 2007 peak is nothing short of incredible.

“The London property market is an extraordinary microcosm. It has effectively broken free of the rest of the UK and is operating in its own stratosphere.”

House prices in England are currently 5% lower than their pre-crisis peak five years ago, while they are 13% lower in Wales, 12% Scotland and 53% lower in Northern Ireland.

Robert Gardner, Nationwide’s chief economist, said of the rise in UK house prices: “A number of factors are likely to be contributing to the recent acceleration. Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme,” he said.

Matthew Pointon, property economist at Capital Economics, warned, “It is hard to see how stretched households will be able to shoulder a steady rise in house prices. Data released (last week) showed that real household disposable income dropped by 1.7% in the first quarter; the biggest quarterly fall since 1987. That does not suggest buyers will be in a position to start offering a lot more for their new home.”