28th February 2014
UK house prices rose 0.6% month-on-month and 9.4% year-on-year in February after an increase of 0.8% month-on-month in January according to the latest figures from Nationwide.
February marked the eighth successive month that house prices had risen by at least 0.6% month-on-month. Furthermore, annual house price inflation of 9.4% in February is the highest since May 2010, further fueling concern that there is a very real danger of a new housing bubble developing
In addition, the Land Registry reported that house prices rose 1% month-on-month in January, resulting in a year-on-year increase of 4.2%.
Howard Archer chief UK and European economist at IHS Insight says: “While the strength of house prices is not yet a serious concern outside of London, it is something that needs to be closely monitored given that a number of recent data and surveys have indicated that the strength in house prices is becoming more widespread. There is rising buyer interest and strengthening market activity across regions.”
With latest data and surveys consistently showing markedly rising buyer interest and strengthening housing market activity, prices look set to see further strong increases over the coming months – especially as a shortage of available properties is exerting further upward pressure on prices in a growing number of locations.
Archer adds: “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.
“While the Bank of England currently does not currently see excessive house price rises outside London, Mark Carney has expressed concern about the UK’s past record of house booms and busts, and we believe the bank will take further action later this year to try and dampen the housing market. This could very well include the Bank of England recommending to the government that it dilutes the Help to Buy mortgage guarantee scheme. In particular, the £600,000 price limit for a house under the scheme could be cut, perhaps to £300,000.”