Fears of a UK property bubble mount
Highest annual growth in property prices recorded since 2007 as calls come for more construction to boost supply
Rightmove saw asking prices increase by 1% month-on-month across England and Wales in January to reach £243,861 (€295.7k) on average, marking the biggest monthly jump it has seen for this time of year in records going back to 2002. The year-on-year increase of 6.3% in prices is the highest annual rise seen since November 2007 as sellers anticipate a fresh surge in buyer demand in 2014. Asking prices in London recorded the strongest annual rise, with a 7.0% increase taking the average price to £514,704. Photograph: Rui Vieira/PA Wire Photo.
Asking prices for homes in Britain saw their biggest ever rise for the December-January period, property website Rightmove said on Monday, potentially adding to concerns about the risk of a housing bubble.
Rightmove’s figures show the price of properties coming on to the market rose 1 per cent between December 9th and January 11th. The data series began in 2002. The rise contrasts with an average fall of 0.2 per cent in similar timeframes over the last 10 years during the Christmas holiday period, Rightmove said.
Annual price growth was 6.3 per cent - the highest since November 2007 and more than three times the rate of inflation. Britain has been growing faster than most other major industrialised economies in recent months, with the housing market standing out as it benefits from falling unemployment, record low interest rates and government mortgage schemes. Concerns about the speed of recovery in the market prompted the Bank of England in November to announce it would remove incentives for mortgage lending under its Funding for Lending Scheme. But the sector remains supported by the government’s Help to Buy mortgage guarantee programme.
Rightmove said there were early signs of greater supply of existing homes coming on the market in 2014 but said more construction in the private and social sectors was required to keep up with demand.