UK house prices rise in June at fastest rate in over 9 years - Nationwide

Wednesday 02 July 2014 17.44
The price of a typical property in London has reached the £400,000 mark for the first time
The price of a typical property in London has reached the £400,000 mark for the first time

British house prices rose at their fastest annual pace in more than nine years last month, and prices in London have shown their biggest jump in a generation, figures from mortgage lender Nationwide showed today. 

UK house prices rose by 1% on the month in June after a 0.7% rise in May, taking the annual rate of increase to 11.8% - the biggest rise since January 2005. 

Both the monthly and the annual growth rates exceeded all forecasts in a Reuters poll, in which economists had predicted that the rate of growth would stabilise. 

But the most striking number was for London, where house prices in the three months to June were 25.8% higher thana year earlier - an annual increase not seen since 1987. 

"The price of a typical property in London reached the £400,000 mark for the first time, with prices in the capital now around 30% above their 2007 highs and more than twice the level prevailing in the rest of the UK," said Nationwide's chief economist Robert Gardner.

Average house prices outside London are a fraction below their 2007 peak, Gardner said, while transaction levels nationally are still well below their historic average. 

The figures throw into sharp relief the challenge facing the Bank of England as it tries to stop a regional housing boom from destabilising the rest of the economy.

In an attempt to stop Britons borrowing too much, last week the central bank said that no more than 15% of new mortgages could be to people seeking to borrow over 4.5 times their annual income. Around 10% of loans fall into this category around the UK, rising to roughly 20% in London.