House Prices Rise in May, According to Nationwide

Chris Bates, Editor of Build It magazine
by Chris Batesmith
30th May 2013

UK house prices have risen 1.1% year-on-year, which represents the fastest rate of growth since November 2011, according to a survey published today by Nationwide building society.

The average UK house price in May 2013 is now £167,912, an increase of 0.4% on April’s figures.

Robert Gardiner, Nationwide’s chief economist, said the increase underscored growing confidence in the housing market.

“It’s not just prices – a number of measures of housing market activity have also started to move higher,” said Gardiner.

“In the first four months of 2013, the number of property transactions was running at around 5% above the monthly average prevailing in 2012.”

Mortgage approvals are also up by around 4% compared to last year’s monthly average, according to the report.

Affordable mortgage loans

A number of factors are at play in contributing to the pick up in housing transactions – not least the increasing availability of cheap mortgages.

“There has been an improvement in the availability and a reduction in the cost of credit,” said Gardiner. “Indeed, mortgage rates have fallen back towards all time lows in recent months.”

Gardiner identified the government’s Funding for Lending scheme, launched in August last year, as particularly helpful in making cheap finance available to lenders – which is in turn translating into more affordable mortgage products for house buyers.

The coalition’s NewBuy and Help to Buy schemes are also helping to open up the housing market to first-time buyers and house hunters with smaller deposits. Stage one of Help to Buy, for example, works by allowing borrowers to put down deposits of just 5% on property transactions.

Gradual recovery

Despite the increase, which was underpinned by low interest rates and wider UK economic growth in the first quarter of 2013, Gardiner played down the idea of huge leaps in the housing market.

“Progress is likely to be gradual and downside risks remain,” he said. “Pressure on household budgets remains intense, as wage growth has decelerated.”

The slow-growth prediction may help to assuage scepticism about policies such as the Help to Buy scheme, which some critics believe could lead to a new housing market bubble.

Sir Mervyn King (the outgoing governer of the Bank of England) has recently warned against Help to Buy becoming a permanent fixture. The second phase of the scheme is set run between January 2014 and 2017, with the government planning to guarantee up to 15% of a mortgage on houses worth up to £600,000.

Source: Nationwide

Comments are closed.

You may be interested in

Our sponsors