House prices rise in double figures

Thurrock Gazette: Annual house price growth has reached 10% for the first time in four years Annual house price growth has reached 10% for the first time in four years

House prices leapt by 10.9% year-on-year in April marking the first time in four years that annual growth in values has reached double figures, Nationwide has reported.

Property prices across the UK lifted by 1.2% on the previous month to reach £183,577 on average, increasing the risk that people will have to stretch their mortgage borrowing, the building society said.

The last time that the annual house price growth reached the 10% mark was in April 2010.

Robert Gardner, Nationwide's chief economist, said housing market demand from potential buyers is "likely to remain robust" amid growing consumer confidence in the economy generally and mortgage rates remaining close to all-time lows.

Mr Gardner said: " Earnings growth is beginning to pick up, with wage increases finally outpacing the rise in the cost of living in February.

"Nevertheless, house price growth is outstripping income growth by a wide margin. The risk is that unless supply accelerates significantly, affordability will become stretched."

Mr Gardner said the upturn in new house building is continuing to lag behind the growth in demand from potential buyers, with the number of new homes being built in England still standing at around 40% below its pre-crisis levels.

The imbalance between the growth in the supply of homes on the market and rising buyer demand is helping to put an upward pressure on prices.

Some critics of the Government's flagship Help to Buy scheme to give people with small deposits get a helping hand on the property ladder have argued that this has added to the pressure on house prices by fuelling buyer demand further.

In London in particular, strong interest from wealthy overseas investors has been helping to push up demand.

Mr Gardner said: "Interestingly, price growth in London and the South East appears to be being driven by the top end of the market, with higher priced locations recording stronger price growth...

"This pattern accords with housing transactions data, which shows that higher priced properties in London and the South East have accounted for a higher proportion of transactions."

Mr Gardner said that in London, the proportion of higher-end house sales involving properties worth over £500,000 has surged from around one in seven (13%) in 2007 to one quarter (25%) last year.

The share of house sales worth one million pounds-plus has more than doubled over the period, from 3% to over 6%.

Toughened mortgage lending rules came into force last weekend which mean that lenders have to ask people looking to buy a home or re-mortgage more detailed questions about their personal spending habits to work out whether they can afford a home loan.

They also have to apply "stress tests" to make sure a borrower could still afford their repayments as and when interest rates rise under the Mortgage Market review (MMR) rules.

Some experts have said the new rules could slow the housing market recovery down while the industry adjusts to the changes.

Mr Gardner said: "MMR changes, which place a greater emphasis on affordability, should help to ensure that prices do not become detached from earnings."

Comments (1)

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5:13pm Thu 1 May 14

welshmen says...

Their talking up Interest rates, we haven't seen much if any rise in Newport, it's just London housing that sell well, mostly £2 Million property's sold to rich foreigners, yet we will have to pay the rise in the near future....
Their talking up Interest rates, we haven't seen much if any rise in Newport, it's just London housing that sell well, mostly £2 Million property's sold to rich foreigners, yet we will have to pay the rise in the near future.... welshmen
  • Score: 1
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