UK house prices show biggest annual rise since June 2007

Thursday 01 May 2014 11.14
UK house prices rose 1.2% last month
UK house prices rose 1.2% last month

British house prices rose much faster than expected last month, according to data released today from mortgage lender Nationwide.

UK house prices rose 1.2% last month, the biggest annual rise since the start of the financial crisis.

The average price of a house in Britain now stands at £183,577, 0.9% 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 quarter one of 2014 were 2% lower than the pre-financial crisis peak, though in London they were 20% 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 Bank of England 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.
              
Its outgoing chief economist Spencer Dale said yesterday 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.