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Average UK house price surges by 14k in a year - the biggest increase since October 2007, says Halifax


By Camilla Canocchi


The annual rate of UK house price inflation is at its highest level since before the financial crisis, according to the latest survey today.

The average property value in March was 8.7 per cent higher than the same month a year ago, said the Halifax report, the fastest increase since October 2007 and significantly up on the rise of 7.9 per cent recorded in February.

However, house prices fell by 1.1 per cent compared to the previous month - only the third monthly decline in the last fifteen months. It is the second survey this week to suggest a recent softening in the property market after Nationwide reported a slowing in the rate of monthly increases.


Strong demand: House prices recorded another yearly rise in March despite falling on the previous month
Strong demand: House prices recorded another yearly rise in March despite falling on the previous month

The average house price was 178,249 in March compared to 164,341 in March 2013, a rise of almost 14,000 in just 12 months.

Halifax put the big annual surge down to a lack of supply along with strong demand and low mortgage rates, and the survey comes as Business Secretary Vince Cable warned that Britain could be on the verge of a new housing market bubble and called for more homes to be built.

Mr Cable said the average house price today is about 5.5 times the average earnings, getting close to the ratio of more than six recorded just before the 2007 financial crash.

 He says rising prices were making it unaffordable for middle income families to get on the housing ladder and that the fundamental problem was a chronic imbalance between supply and demand. 

 In an interview with the Independent he said: 'A recovering mortgage market is just fuelling demand again.

 'A family on average income is nowhere near able to afford a house at the average price. Property has become much more unaffordable for people on middle incomes.'

 Figures by Halifax showed house prices in the three months to March were 2.3 per cent higher than they were in the final quarter of 2013, indicating house prices were on an upward path.

This echoes research from Nationwide on Wednesday which showed the cost of the average home jumped by almost 16,000 in just a year and London prices were 18.2 per cent higher in March.

 Home sales increased for the tenth successive month in February to 108,940, Halifax said, a 32 per cent rise compared to February 2013. But mortgage approvals eased back, declining by 8 per cent to a total of 70,309.

Price boom: According to Halifax and Nationwide house price indexes, the average value of a property has risen by roughly 15k

Price boom: According to Halifax and Nationwide house price indexes, the average value of a property has risen by roughly 15k

Howard Archer chief UK and European economist at IHS Global said: 'While the softer house price data for March reported by both the Halifax and the Nationwide, and the slowdown in mortgage approvals reported by the Bank of England in February, may slightly ease concerns of a house price bubble developing outside of London (where there is one already), it remains a very real risk and something that policymakers need to closely monitor and be fully prepared to react to.'

Chancellor George Osborne last month said the government will extend its Help to Buy scheme of providing equity loans to buyers of newly built homes to the end of the decade.

Critics of the scheme, which gives mortgages to people who hold five per cent deposit, say it has been driving prices up.

 Mr Osborne argues that the measure is helping families to get a first foot on the housing ladder, but Mr Cable said that the only answer was to build more homes.

 Halifax mortgages director Stephen Noakes said: 'The recent strengthening in house price is increasing the amount of equity that many homeowners have in their home.

'This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply and easing pressure on prices.'

 Jonathan Harris, director of mortgage broker Anderson Harris, said the month-on-month fall in house prices 'could well be just a blip'.

He said a Bank of England report released yesterday into credit conditions showed that banks and building societies are preparing to do more lending in the coming months amid expectations of heightened demand.

Mr Harris said: 'This suggests that any dip in lending now is not the beginning of a sustained decline. The lack of stock coming to the market is the real issue slowing everything down, with buyers competing at a frenzy of open houses and on sealed bids.'


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