House Prices Rise by 9%, say Nationwide
House Prices Rise by 9%, say Nationwide
House prices are continuing to climb, with a 9.4% year-on-year increase occurring in February, lifting the average price of a home across the UK to £177,846, according to the Nationwide. Meanwhile, the overall annual rate of growth shot up 8.8%, the quickest rate increase in 4 years. Robert Gardner, Nationwide’s chief economist commented: “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 the pace of household formation.”
This month marks the 14th month in a row that prices have risen. The Land Registry also released figures showing house prices rose 1% in the month to January to £168,356, resulting in a year-on-year increase of 4.2%. In London, the figures show that house prices rose 10.9% in the last year to an average price of £409,881. However, Nationwide noted that property values were still about 3% below their peak recorded in 2007. For any advice relating to residential property, contact a property lawyer.
Help to Buy has helped
Lenders generally have reported a surge in first-time buyer numbers in recent months. The Government’s Help to Buy scheme, which was launched in England last spring and a second version of the scheme was fired into action across the whole of the UK in October, has been a key factor in spurring the market. Mortgage lenders representing more than two-thirds of the market are taking part in the second version of Help to Buy, which offers home loans backed by the state to first-time buyers and home movers looking to buy a new or an existing home.
More cash buyers
It was also noted that cash buyers have become an increasingly important factor in the housing market in recent years. The share of house sales involving cash increased from 20% in 2005/6 to 35% after the financial crisis. The bigger share of the market that cash buyers have gained appeared to have more to do with a decline in people buying a home with a mortgage amid toughened credit conditions rather than the number of cash buyers rising, thought the Nationwide. The share of cash buyers in London is broadly the same as the rest of the UK, despite the attraction that the capital holds for wealthy overseas investors.
London and “super suburbs” to boom
Separately, a report released last week predicted that house prices in London will rise by a quarter over the next five years. Inner London boroughs will see a growth of 23.1%, and prices in other areas of the capital will rise by 22.7%, according to a five year outlook published by estate agents Savills. The report said 2014 would be the year of the “super suburbs” between central London and the commuter belts, as growth there continues at a faster pace than inner London and the home counties. The report said 2016 would see a surge of as much as eight per cent in one year alone after the uncertainty of the election has passed.
Strongest growth will be seen in south west London, the report claimed, with 6% rises forecast for 2014 alone. “We have already seen the predominantly domestic markets of outer prime London out-performing prime central London over the past year and anticipate that 2014 will be the year when the value gap between London and the lead suburbs and prime inner commuter belt finally begins to narrow,” commented Savills.
IBB‘s private client group includes a specialist residential conveyancing team. Contact one of our conveyancing solicitors by calling us on 01494 790000 or emailing conveyancing@ibblaw.co.uk.
