Record rise in house prices: No signs of a cooling market
HOUSE prices are rising at their fastest rate for four years and are heading for a record high, according to Britain’s biggest building society.
Values are up by 9.4 per cent in a year and are expected to pass the peak they reached at the height of the 2007 property boom as early as this summer.
The average home in Britain is now worth £177,846 after 14 consecutive months of rises, said the Nationwide. Values rocketed by more than £15,000 in the 12 months to February, a monthly increase of £1,267.
February’s 0.6 per cent month-on-month surge contributed to the strongest rate of annual growth since May 2010.
Values are now only three per cent below their £186,044 peak in October 2007. That compares with four per cent in January, suggesting the previous record will be breached by the summer at the latest.
Official figures from the Land Registry also show no cooling of the market. Prices rose by 4.2 per cent year-on-year – twice the rate of inflation. A one per cent rise in January took the average property value in England and Wales to £168,356.
Much of that increase was stoked by London where property values were up 10.9 per cent compared with a year ago – more than five times consumer price inflation, which fell to 1.9 per cent last month.
The Land Registry figures show average home prices in the capital surging by more than £8,000 in a month to hit a new record high of £409,881.
The typical London home went up in value by more than £40,000 in the year to January – around a third more than the average Londoner’s annual salary.
The increase was fuelled by a stampede of first-time buyers and wealthy foreigners, particularly from Asia, looking to invest.
All regions in England and Wales saw an increase in annual price increases while the North-east saw the biggest monthly rise at 2.6 per cent.
Robert Gardner, Nationwide’s chief economist, said prices were rising because of an improved economic backdrop, low borrowing costs and a lack of properties on the market.
“Demand is supported by record low interest rates, improved credit availability and rising consumer confidence thanks to the healthy gains in employment recorded in recent quarters.
“Price growth is supported because the supply of housing remains constrained, with the number of completions still well below their pre-crisis levels, which was already insufficient to keep up with the pace of household formation.”
Nicholas Ayre, of buying agency Home Fusion, said: “The supply issue is still constraining the market and contributing to price rises.
“While the latest news on the house-building front is positive, there is always an 18 to 24-month time lag for new builds to reach the market.”
The number of properties sold in England and Wales for over £1million increased by 45 per cent from 677 to 985 last year, according to the Land Registry. Overall, prices ranged from £10,000 to £28.5million, it said.