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House prices leap 3.9% in May

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UK property prices have soared by 3.9% in the space of just one month to stand 8.7% higher than May 2013.

According to the Halifax House Price Report the average UK house price in May stood at £184,464. Using a less volatile quarterly comparison, the average price between March and May was 2% up compared to the preceding three months.

Halifax said this level of increase had remained steady since June 2013.

“House prices in the three months to May were 2.0% higher than in the three months to February,” Halifax mortgage director Stephen Noakes said.

“The quarter-on-quarter price change is a more reliable indicator of the underlying trend compared to the monthly price movement. Annually prices were 8.7% higher in the three months to May than in the same three months last year.

“On an annual basis housing demand is still strong and continues to be supported by a strengthening economic recovery. Consumer confidence is being boosted by a rapidly improving labour market and low interest rates, although growth in average earnings still remains weak.

“However, there are signs of a revival in housebuilding which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term.”

Stephen Smith, director mortgage club and housing at Legal & General, said:

“Today’s figures highlight the continuing trend of rising house prices across the UK. This trend is particularly clear when looking at the year-on-year increase. However it is important to consider the regional picture when looking at house prices.

“Areas such as London and the South East are seeing rapid increases in property value, which are driving a large part of the house price growth in the wider market.

“Despite this, other areas are not experiencing this degree of growth, highlighting the existence of a two speed housing market in the UK. With demand for housing unlikely to subside in the near future, more houses need to be built to re-establish a balanced market.

“This is important to help ensure a sustainable recovery. A minimum of 250,000 homes need to be built every year to meet this demand, but we are currently only constructing around half that figure. If not tackled, the issue of housing supply has the ability to significantly stifle wider economy, so it is encouraging to see that it is now firmly on the political agenda.”

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