House price average at record high

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Published: Wednesday 29th April 2015 by The News Editor

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House prices have jumped by 1% month-on-month in April to reach a new record average high in cash terms, pushing over the £190,000 mark for the first time, Nationwide Building Society has reported.

The increase marks the strongest growth since June last year, and took the average UK house price to £193,048.

As a result, year-on-year price growth started to accelerate again for the first time since August, Nationwide said. The year-on-year pace of growth was 5.2%, up from 5.1% in March.

Property values hit a string of all-time highs last year, according to Nationwide’s index, surpassing their 2007 peak in cash terms in May 2014.

But even during last year’s run of records as the housing market bounced back into life, average prices remained below the £190,000 mark.

Despite prices reaching a new peak in April, the annual pace of house price growth is still around half the levels seen last summer, when it hit double digits.

Robert Gardner, Nationwide’s chief economist, said: “The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months. Indeed, the number of mortgage approvals is still well below its long run average and 20% below the levels recorded in early 2014.

“The strength of the economy and relatively subdued pace of activity in the housing market remains something of an anomaly. It is possible that heightened uncertainty ahead of the election is weighing on activity, though there is no compelling evidence from previous UK elections to suggest a strong impact.

“Healthy labour market conditions and continued low mortgage rates should help underpin housing demand in the quarters ahead.”

In signs of what is to come, property website Rightmove recently reported that house sellers’ asking prices have also reached an all-time high across England and Wales.

Several studies have highlighted a lack of homes on the market as a strong factor driving up prices as buyers, despite having access to ultra-low mortgage rates, have a smaller pool of properties to choose from.

Comparing the UK housing market with the rest of the EU, Mr Gardner said: “The UK is often characterised as a nation of home owners, though compared with our European neighbours, the proportion of the population owning their own home (either outright or with a mortgage) is not particularly high. In fact, it is actually towards the lower end of the range.

“Although some other European nations have seen declines in their home ownership rates in recent years, the movement in the UK has been more pronounced. That said, even at its all-time high of 73% in 2007, the UK home ownership rate was not particularly high by EU standards. Since then, there has been significant growth in the private rental sector.”

Mr Gardner said the propensity for young adults aged between 18 and 34 to live with their parents is still “relatively low”, but has become more pronounced over the past five years.

Howard Archer, chief UK and European economist for IHS Global Insight, said: “We expect housing market activity to gradually pick up over the coming months. Meanwhile, a current shortage of properties coming on to the market seems to be providing increasing support to house prices. Consequently, we expect house prices to rise by around 5% over 2015.”

Published: Wednesday 29th April 2015 by The News Editor

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