UK house prices surge by 8.8% in June - NationwideWednesday 09 July 2014 11.23
UK house prices surged by 8.8% annually in June in the strongest uplift seen since 2007 as consumer confidence continues to rise, Halifax has reported.
The increase took the average UK house price to £183,462, although on a month-on-month basis prices slipped back by 0.6%, marking the fourth monthly price fall seen since last December.
The annual increase in property values has accelerated on an 8.7% increase recorded in May and marks the biggest year-on-year jump seen since October 2007, the figures show.
A year ago, in June 2013, house prices were increasing annually at less than half the pace they are now, by 3.7%.
The latest 0.6% monthly drop in property values marks a large swing backwards from a month-on-month increase of 4% recorded in May.
Halifax said month-on-month price changes can often be "volatile" and its quarter-on-quarter measure of price fluctuations is a more reliable indicator of what is happening in the market.
This quarterly measure revealed that the underlying direction for house prices is still pointing upwards. UK property values between April and June this year were 2.3% higher than they were between January and March.
Halifax said that this measure has remained steady since June 2013, with quarterly increases ranging between 2% and 2.3% consistently recorded over the last year.
"Housing demand continues to be supported by an economic recovery that is gathering pace, with employment levels growing and rising consumer confidence, although real earnings growth remains sluggish," Halifax said.
Last week, building society Nationwide reported that its house price study was showing that values have surpassed their 2007 peak to stand at a new all-time average high of £188,903.
Nationwide said London property values have surged by nearly 26% year-on-year, leading some economists to warn that the risk of a sharp correction in prices at some point in the coming years is growing.
There have recently been signs that some of the strongest heat is being taken out of the housing market, following the introduction of toughened lending rules at the end of April, which force lenders to question home buyers and people looking to remortgage more deeply about their spending habits.
UK lenders also have to apply "stress tests" to make sure applicants would still be able to afford their home loan repayments as and when interest rates rise.
Experts have said it is too soon to know whether the impact of these new rules will just be temporary, as they bed in.
The Bank of England has also recently announced new curbs on riskier lending. It has said that loans of 4.5 times a borrower's income or higher should account for no more than 15% of new mortgages issued by lenders.
The Bank also said that lenders should ensure that borrowers can keep up their mortgage repayments in the event of a rise of up to 3% in interest rates over the first five years of the loan.
Halifax pointed to figures from HM Revenue and Customs, which showed that home sales dipped to under 100,000 in May for the first time in six months, although transactions were still up by 15% compared with May 2013.