October 21 2014 Latest news:
Wednesday, July 2, 2014
House prices lifted by 11.8pc year-on-year across the UK in June to reach another new all-time high of £188,903 typically, Nationwide has reported, with prices in East Anglia rising by 9.5pc.
The annual uplift is the biggest jump seen since January 2005, and a 1.0pc month-on-month price increase also helped to push average prices to £2,391 above a previous peak in cash terms which had been recorded just one month earlier, in May.
London property values have leapt by 25.8pc annually, marking the highest growth rate for the capital since 1987, and they have also broken through the £400,000 mark on average for the first time, the building society said.
The typical price of a London property is more than double the average UK house price, at £400,404. Prices in London now stand at 30pc above their 2007 peak and the gap between values in the capital and the rest of the UK is “the widest it’s ever been”, according to Nationwide’s report.
Strong annual price gains were not just confined to London and southern England. Nationwide said in Southern Scotland, which includes Ayrshire and the Borders, prices are up by 14pc on the previous year, as are prices in Belfast in Northern Ireland.
In South Wales (West), which includes the Vale of Glamorgan, Bridgend and Swansea, house prices have seen a 12pc year-on-year jump.
After London, Cambridge was named as the top-performing city for the housing market. Prices in Cambridge have surged by 20pc over the last year to reach £419,187 typically. St Albans was the third strongest-performing city, with values lifting by 18pc annually to reach £451,800 on average.
Newcastle was named as the worst-performing city, with a 3pc annual uplift taking prices there to £181,473 typically.
Across the UK, all regions recorded annual price gains for the fourth quarter in a row, with the largest being in London and the smallest in Scotland, where values have risen by 5.4pc annually to reach £141,872 on average.
In Wales, property prices are up by 9.3pc on a year ago, now standing at £145,812 typically, while in Northern Ireland, where the housing market is still recovering from some sharp falls seen in the wake of the financial crisis, values have risen by 8.4pc annually to reach around £117,150. Prices in Northern Ireland are still around half the level they were at their peak.
Prices lifted annually by 16.4pc in the Outer Metropolitan commuter belt area, by 14.0pc in the Outer South East, by 9.8pc in the South West, by 9.5pc in East Anglia, by 8.3pc in the East Midlands, by 8.2pc in the West Midlands, by 8.1pc in the North, by 7.1pc in the North West and by 7.0pc in Yorkshire and Humberside.
Robert Gardner, Nationwide’s chief economist, said house prices surpassed their 2007 peak levels in the second quarter of this year, “just as UK economic output is likely to have surpassed the high water mark reached before the financial crisis”.
He said the latest figures show there is still “significant variation” in the performance of the housing market across the UK. Across the country as a whole, prices are just under 1pc above their pre-financial crisis peak, but when London is taken out of the equation they are 0.4pc below this previous high. Prices in southern regions are now above their 2007 peaks, while those outside the South are still below this level.
Last week, the Bank of England moved to put curbs on riskier mortgage lending by announcing that loans of 4.5 times a borrower’s income or higher should account for no more than 15pc of new mortgages issued by lenders.
The Bank also said that lenders should apply a new “stress test” ensuring that borrowers can keep up their mortgage repayments in the event of a rise of up to 3pc in interest rates over the first five years of the loan.
There have already been some signs of a slight slowdown in the housing market since the launch of stricter mortgage lending rules under the Mortgage Market Review (MMR) at the end of April, which mean mortgage applicants must be quizzed in more detail about their borrowing habits.
Experts have said it is too soon to know whether the impact of these new rules will be temporary, as they bed in, or more longer-lasting. It has also been said that a continued shortage of properties on the market is still helping to push prices upwards.
Mr Gardner said that the Bank’s new measures are “unlikely to have a significant impact on housing transactions or the pace of price growth in the near term”.
He continued: “Most major lenders are already using a stress rate in their affordability calculation that is broadly consistent with the new stress test.
“Similarly, the proportion of house purchase loans at or above 4.5 times borrowers’ income is currently some way below the 15pc cap.”
Mr Gardner said that the Bank’s new policy measures, alongside the MMR rules, should help to limit the risk of house prices becoming detached from earnings, while mounting speculation over possible interest rate rises may also dampen housing market activity in the months ahead.