29
Apr
HOUSE PRICE INFLATION HITS 10.5%
The annual rate of UK house price inflation has hit double
figures for the first time since June 2007, according to the
Nationwide.
The building society said that house prices in the UK had risen
by 10.5% in the year to the end of April.
Prices rose by 1% in April to push the cost of the average home
to £167,802.
However, the Nationwide predicted that the past year's surge in
prices would tail off later this year, with sellers starting to
outnumber 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.
'Subdued mortgage market'
The building society's figures show that prices in the past three
months were just 1.1% higher than in the preceding three
months.
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The strong rebound in house prices over the last year has taken
place within the context of a subdued mortgage market
Martin Gahbauer
Nationwide chief economist
That was the slowest three-month on three-month rate since June
last year and reflects the fact that much of the annual increase in
prices has been due to the rebound in prices that took place last
summer.
Despite the revival in prices, which has taken many commentators
by surprise, activity in the property market is still relatively
subdued.
This has been due to the enforced rationing of mortgage funds
provoked by the credit crunch and the banking crisis that started
in 2007.
This means the average first-time buyer still has to put down a
25% deposit to secure a mortage.
The most recent figures from HM Revenue & Customs (HMRC)
showed that completed sales in the UK jumped by 22% in March from
the month before to 72,000.
However, apart from last year, that was the lowest March figure
since the HMRC's current records started in 1978.
"The strong rebound in house prices over the last year has taken
place within the context of a subdued mortgage market, with the
number of mortgage advances across the industry still well down on
pre-crisis 'norms'," Mr Gahbauer said.