Nationwide: House prices reach their 2007 peak
07-03-2014
Data from Nationwide prompts shouts of ‘unsustainable’ with annual price inflation at 26 per cent.
By Ruth Gillbe
UK house prices continued to increase across June by 1 per cent compared with May despite evidence the Mortgage Market Review has been cooling the housing market.
Last month, data released from HMRC and the Royal Institution of Chartered Surveyors indicated the market is cooling off post the inception of MMR.
However, prices are 11.8 per cent higher than they were this time last year across the UK, and the average house priced has moved from £186,512 in May 2014 to £188,903 in June 2014.
House prices in London have also continued to climb, and the city now has annual price growth of 26 per cent.
Robert Gardner, chief economist of Nationwide, said: “House prices recorded their fourteenth successive monthly increase in June, rising by 1 per cent. As a result, the annual pace of price growth picked up to 11.8 per cent from 11.1 per cent the previous month.
“In seasonally adjusted terms house prices reached their 2007 peak in the second quarter, just as UK economic output is likely to have surpassed the high water mark reached before the financial crisis.
“While all regions recorded annual price gains for the fourth quarter in a row, there is still significant variation across the UK, with the aouth of England continuing to record the strongest rates of growth.
“In particular, London continued to outperform, with prices up by almost 26 per cent in the second quarter compared with the same period of 2013.”
Alexander Gosling, managing director of online estate agents Housesimple.co.uk, said: “The speed of London’s house price rises long since moved from the breathless to the breakneck.
“But if anything shouts ‘unsustainable’, it is annual price inflation of 26 per cent. Such frothy excess hasn’t been seen since the peak of the late 1980s boom.
“With prices now 30 per cent past their 2007 peak and rising by an incredible 7.6 per cent a quarter, the capital’s property market is clearly living in its own supercharged bubble.
“It is too soon to talk of London price rises going off the boil, but the heat may finally be at maximum.”