28th March 2014
House prices in England and Wales rose 0.7% month-on-month in February according to the latest numbers from the Land Registry.
The latest hike takes year-on-year growth to 5.3%. Prices in London rose 0.7 month-on-month and are now a 13.8% stronger year-on-year.
But house prices were up year-on-year in every region in February, except for the North East, which declined by 1.3%.
Aside from London, there was a marked rise of 7.1% in the South East and 6.2% in the East while Wales was up 1.7%.
The market is being buoyed by substantially improved consumer confidence, markedly rising employment and extended low mortgage interest rates as well as the Government’s Help to Buy initiative. Meanwhile, limited supply of houses is a factor pushing up prices in an increasing number of areas and not just in London.
The latest survey from the Royal Institute of Chartered Surveyors indicated that the headline sales-to-stock ratio rose markedly to 38% in February from 35% in January, marking the fifth consecutive month above its long run average of 32% and the highest reading since September 2007.
Howard Archer, chief UK and European economist IHS Global Insight says: “House prices look set to see further strong increases over the coming months. Specifically, we expect house prices to increase by around 8% in 2014 with gains across the country. Furthermore, there is a genuine possibility that this could prove to be a conservative forecast.
Archer warns that policymakers need to keep a very close watch on how the housing market develops over the coming months and to be fully prepared to act. He adds; “Once strong upward momentum has developed in the housing market, it can be hard to stop – especially if interest rates are unlikely to rise markedly.”
“In the budget, the Chancellor asked the Bank of England’s Financial Policy Committee (FPC) to be particularly vigilant against the emergence of potential risks in the housing market.”