3rd January 2014
As the British economy got itself back on track, UK property prices soared by 8.4% during 2013 with all regions witnessing rises according to new numbers from Nationwide writes Philip Scott.
As a result of the upswing the average UK house price is now £175,826, the highest level since April 2008 and just 5.5% below the record high of £186,044 seen in October 2007.
But with the South East leading the charge, prices in London are now 14% above their 2007 peak, where the price of a typical home in the capital is now £345,186.
Notably the Bank of England also reported that mortgage approvals rose to a 70-month high of 70,758 in November, an increase of 32.6% year-on-year.
The report, based on Nationwide’s own mortgage market information found that house prices jumped 1.5% between November and December, the strongest month-on-month increase in house prices since August 2009.
For its part Northern Ireland enjoyed a 7% year-on-year rise in house prices while Scotland saw a 3.7% increase over the same period, and prices were up 6.1% in Wales.
Commenting on the figures, Robert Gardner, Nationwide’s chief economist, says: “The UK housing market followed the trajectory of the wider economy through 2013, gaining momentum as the year progressed. The average monthly increase in house prices rose from 0.4% in the first half of the year to 1% in the second half of 2013. Overall, prices increased by 8.4% in 2013, though they remain around 5% below the all-time highs recorded in late 2007.
“The upturn also became increasingly broad based over the course of 2013. For the second successive quarter, all thirteen UK regions saw positive annual house price growth in fourth quater, though London and the South East continued to record the strongest pace of growth.”
Gardner attributes a large part of the pickup in the sector to further improvements in the labour market and the brighter economic outlook, which helped to bolster sentiment amongst potential buyers.”
Howard Archer, chief UK and European economist at IHS Insight believes the latest house price figures can only fuel concern that a new housing bubble could really develop in 2014, especially as the strength in house prices is becoming widespread.
He adds: “We expect house prices to increase by around 8% in 2014 with gains across the country. Furthermore, there is a very real possibility that this could prove to be a conservative forecast.
“We believe that it is very important that the Bank of England has indicated that it is prepared to take further action to rein in the housing market if prices continue to rise markedly amid ongoing strengthening activity.”