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January Sees Fastest Annual Price Increases Since 2010

Tue 18 Feb 2014

According to research undertaken by Nationwide, UK house prices have risen by 0.7% this month and were 8.8% higher than they were back in January 2013.

This figure represents the fastest year on year increase in house prices since May 2010, with the average UK house now priced at £176,491. Robert Gardner, Chief Economist at Nationwide, said:

"The housing market is continuing to gather momentum on the back of further solid gains in employment, record low mortgage rates and rising confidence."

After a lot of talk around the housing market, Nationwide has taken the step to be the first to deliver a solid prediction on the situation for 2014, before detailed surveys are released in the coming weeks.

Government schemes such as Help to Buy have encouraged first time buyers, and there was a good increase in those buying their first home in 2013, thanks to cheaper rates and high LTV loans. Back in 2007, mortgage repayments for first time buyers rose to as high as 51.8% of their take-home pay. This figure, however, was consistently lower at just 33% for the first three quarters of 2013.

This data shows that despite the withdrawal of the Bank of England's mortgage support scheme, the demand for homes in the UK is still strong. Funding for Lending has resulted in a price war when it comes to mortgage rates, meaning that those buying a home with just a 10% mortgage are also seeing lower mortgage repayments.

Property site Rightmove found that interest in properties is currently at a record high and the number of property pages viewed on their site increased by 20% in the first two weeks of 2014 in comparison to the previous year. They also reported receiving over 1.75 million enquiries from home-movers in that short space of time.

Howard Archer, Chief UK Economist at IHS Global Insight, has said of the current situation:

"With the Help to Buy mortgage guarantee scheme only just starting to kick in and interest rates likely to stay extremely low for some time to come, there is still substantial support to the housing market even in the absence of any further support from the FLS".

The Help to Buy scheme started back in April 2013, with the government offering a 20% equity loan to people looking to buy new builds. In the first nine months 12,875 properties were bought with help from the scheme, with the biggest uptake being seen in cities such as Leeds, Milton Keynes and Manchester.