What will December’s house price rise mean for this year?
The end of 2013 saw UK house prices up 1.4 per cent month-on-month, and increasing 8.4 per cent year-on-year.
And things aren’t expected to slow down this year. IHS Global Insight predicts price increases of eight per cent in 2014, with gains across the whole of Britain. Moreover, says chief European and UK economist Howard Archer, this could be a conservative estimate.
A report from Nationwide this morning showed that limited supply is pushing up prices across all areas of the country – not just in London and the South East.
London did, however, continue to lead annual price growth, with an increase of almost 15 per cent in the fourth quarter.
(Nationwide)
Signficant improvement in the housing market, with buyer interest being bouyed by the Help to Buy mortgage guarantee scheme means there’s a “very real danger” prices could take off in the near future. Archer says:
The strong Nationwide for December can only fuel concern that a new housing bubble could really develop in 2014, especially as the strength in house prices is becoming widespread.
And when it comes to the Bank of England and Treasury’s decision to cut Funding for Lending for mortgages, he comments:
[It] looks a highly sensible decision, although in itself it is unlikely to act as a major brake on housing market activity.
We believe that it is very important that the Bank of England has indicated that it is prepared to take further action to rein in the housing market if prices continue to rise markedly amid ongoing strengthening activity.
(Nationwide)