Mortgage News
Annual house price inflation reaches 10.5%
The rate of UK house price inflation has entered double figures for the first time since the credit crisis began.
The latest figures from Nationwide Building Society reveal that average prices rose by 1.0% in April, bringing the annual rate of increase to 10.5%, the highest level recorded since June 2007.
The average UK property is now worth £167,802.
However, Nationwide warned that these healthy gains are likely to lose ground later this year, as the number of sellers coming to the market starts to outstrip the number of buyers.
“There has recently been evidence of a slight shift in the supply-demand balance,” said Martin Gahbauer, the Nationwide’s chief economist.
“While the recovery in new buyer enquiries at estate agent offices appears to have petered out, the last few months have seen an increase in the level of new instructions from sellers.
“All else equal, this should lead to a gradual flattening out of the recent upward price momentum,” he said.
The three-month on three-month figures from Nationwide, which are generally regarded as a better guide to longer-term trends, show that average property prices increased by just 1.1% between the end of January and the end of April.
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Much of the annual increase was down to gains made when the property market rebounded in 2009.
The subdued growth in property prices this year is attributed to a number of factors, ranging from the increase in supply of available properties to uncertainty regarding the imminent General Election.
Commenting on today’s figures, Tim Hammond, chief executive, of property search firm The Buying Agents, said:
“The concern is that this house price recovery is being fueled entirely by fear and uncertainty amongst buyers and sellers, rather than an efficiently performing market.
“Hopefully, once the General Election is behind us, a semblance of certainty and normality will return to the market, and we may start to see a market that is operating not on fear, but on the true value of a property and what a buyer is prepared to pay.
“This is likely to result in prices dropping in the short term, but in the longer term we should see steady growth and a sustained market recovery, built around firm foundations.”