Property prices up 8.4%

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The value of the average UK home has increased by 8.4% over the past 12 months.

According to the latest figres published by the UK’s largest building society, Nationwide, house prices across the country rose by 8.4% in 2013 as the wider economy improved.

The building society’s house price index showed prices rose 1.4% in December to an average value of £175,826 but were still about 5% below their 2007 peak.

Jeremy Duncombe, Director of Legal & General Mortgage Club, said:

“House prices look set to rise in 2014 in a similar pattern to how they grew during the latter part of 2013. Now that confidence is once again returning to the market it is a good time for homeowners to consider remortgaging to take advantage of low rates, especially as interest rates are likely to rise in the short to medium term as the UK economy continues to grow.

“However, there also needs to be an increase in the number of new homes being built if more people are to realise their dream of buying their own home.

“House builders, such as Persimmon and Barratt are still building fewer new homes each year than before the recession and expect this to continue until 2017 at the earliest. A lack of homes leads to increased competition and prices, making it harder to buy a house.”

Alexander Gosling, director of the online estate agents Housesimple.co.uk, added:

“The gulf is shrinking to just a gap. London is still in a league of its own, but finally some other regions are seeing price rises to match those of the South East.

“The housing market spent the first half of 2013 deeply polarised between South East England and the rest, but by the end of the year the momentum had begun to spread further afield.

“In the last quarter of the year, price rises in the Outer Metropolitan area around London were overtaken by those of two non-South East regions.

“It’s telling that the two new regions to muscle into the top five are areas where prices had fallen fastest and hardest – Northern Ireland and Yorkshire and Humberside. While their spurt of growth at the end of the year came from a low base, such strong numbers are a testament to resurgent levels of confidence.

“But the late surge in regions outside the South East did little to change the annual picture – London continues to stand head and shoulders above the rest. Posting nearly 15% annual growth, average prices in the capital are now at record levels, 14% above their 2007 peak.

“Property market bulls insist this is no bubble, but such double-digit growth is clearly unsustainable. Interest rates will surely rise in 2014 and those buying in haste and beyond their means now may repent at leisure later.”