UK house prices show biggest annual rise since 2007
Survey shows surprise climb in prices, adding to concerns that recovery may get out of control
Signs advertise properties for sale in London. Photograph: Jason Alden/Bloomberg News
British house prices rose much faster than expected last month to record their biggest annual rise since the start of the financial crisis, data from mortgage lender Nationwide showed today.
House prices rose 1.2 per cent last month alone, Nationwide said, up from an upwardly revised 0.5 per cent in March and far outstripping expectations in a Reuters poll for a 0.7 per cent increase.
The average price of a house in Britain now stands at £183,577, 10.9 per cent higher than a year ago and the biggest annual rise since June 2007.
The latest spurt is likely to add to concerns that Britain’s housing market recovery may get out of control, despite measures introduced late last month to impose more stringent affordability checks on home-buyers.
“Underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further,” said Robert Gardner, Nationwide’s chief economist.
Unadjusted for inflation, house prices in the first three months of 2014 were 2 per cent lower than the pre-financial crisis peak, though in London they were 20 percent higher.
As in previous months, Nationwide warned that the lack of new houses to meet demand would continue to pressure prices.
“The risk is that unless supply accelerates significantly, affordability will become stretched,” said Mr Gardner.
The BoE has said it would target mortgage lending directly before raising interest rates for the whole economy if house price rises threaten to get out of control.
Yesterday, its outgoing chief economist Spencer Dale said that Britain’s housing market was not showing signs of being in a price bubble at the moment but that policymakers “should be nervous” about the pace of the recovery. (Reuters)