Latest house price index confirms upward trend of UK property prices

UK residential property prices increases by 7.7% in the three months to November compared to the previous year, according to the latest house price index from the Halifax, one of the UK’s biggest mortgage lenders.

It is the biggest annual leap in prices for six years and prices were up 1.1% on a monthly basis taking the average price of a home in the UK to £174,910 and adding almost £2,000 to the price in just four weeks.

The data confirms that home prices are moving steadily upwards and housing economist Martin Ellis said that stronger demand combined with a lack of homes for would be buyers to choose from is the reason behind rising prices.

It is the tenth monthly increase in a row for the index but the typical price is still 12% below its 2007 peak.
Ellis also said that low interest rates, improvements in consumer confidence and government schemes such as Funding for Lending and Help to Buy have boosted demand.

‘However, continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices,’ he warned.

Ellis also pointed out that a revival in house building could help to curb upward pressure on prices over the medium and long term.

But Howard Archer, economist at IHS Global Insight, believes that the rise in prices is far from over. ‘House prices look set to see further strong increases over the coming months despite the Bank of England ending Funding for Lending support for mortgage lending, and they could very well see another marked rise in December,’ he said.

He predicts prices could rise by around 8% in 2014 although as in 2013, price growth is expected to be driven by increase in London and the south east of the country.

‘While the strength of house price rises in London is becoming an increasing concern and pushing up the overall national increase in house prices, we are currently some way off from an overall housing market bubble emerging,’ he added.