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October sees further rises in UK house prices

According to data released from the latest Nationwide HPI, house prices are now around 7% below their 2007 peak.HEADLINES  

                                                   OCT-13      SEP-13
Monthly Index*                          345.4     341.9
Monthly Change*                     1.0%       0.9%
Annual Change                        5.8%       5.0%
Average Price
(not seasonally adjusted)     £173,678     £172,127

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: 

“The UK housing market appears to be following the more resilient upward trend evident in the wider economy in recent quarters. House prices increased by 1% over the month in October, maintaining the momentum that has been building in the second half of 2013. After averaging less than 1% in the first half of the year, the annual pace of house price growth accelerated to 5.8% in October from 5% the previous month.

The ability and willingness of potential buyers to transact has been steadily increasing. The ability to buy has been supported by continued gains in employment and policy measures such as the Help to Buy and Funding for Lending schemes, which have improved the availability and lowered the cost of credit. Mortgage rates are close to all time lows.

The willingness of potential buyers to step into the market has also been increasing. While employment has been rising steadily for some time, it is only in the last few quarters that consumer sentiment has improved markedly. This may in part be the result of the improved performance of the wider economy. The UK economy expanded at a healthy 0.8% q/q pace in Q3 - the third consecutive increase and the fastest pace of growth for three years.

House price growth has accelerated as buyer demand has picked up more quickly than the supply of new homes. The risk is that if demand continues to strengthen while the supply of property remains constrained affordability could become stretched. Indeed, average wages have continued to decline in real terms even though employment growth has been fairly robust in recent years.

Nevertheless, while house price growth has picked up, at a national level prices remain around 7% below their 2007 peak. Moreover, typical mortgage servicing costs remain modest by historic standards thanks to the ultra-low level of interest rates. A typical mortgage payment for a first time buyer is currently equal to around 29% of take home pay, in line with the long term average.”

James Hall, director of estate agents, Fishneedwater said:
 
“Words can't describe what's happening to prices in the capital right now. Bidding wars and gazumping are an everyday occurrence.This isn't just happening in London, either. Competition for property in many other areas of the country is rife. The property market hasn't been this active since before the crash.

First time buyers have been the catalyst of the revival, driving transaction levels across the rest of the market. For a number of years, first time buyers were nowhere to be seen. Now, they are back and they are back in big numbers. The property market is performing largely because the mortgage market is so attractive People see the rates on offer and it's hard not to make the most of them. They’re too good to resist. There is around four to five years of pent-up demand and this has hit the market at the same time.
 
In London, a lack of supply continues to place upward pressure on prices. There's just not enough property on the market and this is driving prices ever higher and creating unheard-of levels of interest for individual properties."

5 Comments to October sees further rises in UK house prices:

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