29
Jan
House prices could rise by 10% a year, Nationwide says
The rate of house price increases could soon rise above 10% a
year, the Nationwide building society has said.
Its latest survey shows that the average UK house price rose by
1.2% in January, pushing the annual rate up to 8.6%.
It means the average UK home now costs £163,481.
The Nationwide said prices had now been rising for nine months
in a row, and the rate of increase was the fastest since October
2007.
"House prices strengthened their upward momentum at the start of
2010, increasing by a seasonally adjusted 1.2% month-on-month in
January," said Martin Gahbauer, the Nationwide's chief
economist.
"Unless there is a fall in property values in February, annual
house price inflation is likely to move into double-digit territory
next month for the first time since May 2007," he added.
The three-month on three-month rate, regarded as a less volatile
measure of house prices, saw prices rise by 2.1% in January, down
slightly from 2.3% in December.
Economic news
Mr Gahbauer told the BBC the continued rise in house prices was
"surprising given the UK economy has been in the deepest recession
since the 1920s".
The relative lack of supply in the housing market is one of the
reasons why prices have continued to rise.
Mr Gahbauer explained that some people were not putting their
property on the market because low interest rates were acting as a
disincentive.
He said that their interest rate could rise if a new mortgage
was taken out for a home move.
"People may have a need to move house but may be on a mortgage
that has a very low rate of interest, say 2.5% for some standard
variable rate deals," Mr Gahbauer said.
"Relatively few households have been under financial pressure to
sell their homes into what remains a relatively weak demand
environment," he added.
Rising sales
Many commentators have suggested that the pace of price
increases may ease off this coming year.
Activity in the market has been picking up briskly since the
spring of 2009.
Recent figures from HM Revenue & Customs (HMRC) showed that
the number of homes sold in December jumped to a two-year high of
104,000.
This may have been influenced by buyers rushing to complete
their purchases before stamp duty went up again.
Both the Bank of England and the British Bankers' Association
have reported further increases in the number of mortgages being
approved - a good short term indicator of future trends in the
market.
Source: www.bbc.co.uk/news Friday 29th
January 2010