UK property prices rise for 15 months in a row with 0.4% growth in March
Tue 01 Apr 2014
UK property prices increased by 0.4% last month and are now 9.5% higher than a year ago, according to the latest index from the Nationwide Building Society.
The average price of a home is 180,264 and prices are now just 3% below where they were at the peak of the market in 2007. But it is London that is leading the price growth. In the capital city property prices increased by 18% year on year in the first quarter of 2014, taking the average price of a typical home to 362,699. This is more than twice the level prevailing in the rest of the UK when London is excluded. Indeed, the gap between house prices in London and the rest of the UK is the widest its ever been, both in cash and percentage terms.
Nationwides chief economist Robert Gardner said that there is little doubt that the recovery in the UK housing market is now well under way. He pointed out that house prices have increased for 15 months in a row. However, there are some tentative signs of moderation, with the monthly pace of price growth slowing to 0.4% in March compared with 0.7% in February and 0.8% in January. Nevertheless, viewed in annual terms, price growth is continuing to run at a robust pace, said Gardner.
Although growth has seen considerable regional variation there are now signs of it spreading more generally. Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South East have now surpassed their pre-crisis peaks, said Gardner. He added that East Anglia and the South West are less than 5% below their 2007 highs. But in contrast, the North of England, Wales, Scotland and Northern Ireland still have more ground left to recover.
Prices in Northern Ireland were up 5.4% year on year in the first quarter of 2014, although average prices are still around half the level prevailing in late 2007. Scotland saw a 7.6% annual increase in prices, the strongest growth since the fourth quarter of 2007. Wales was one of the few regions to see a slowing in annual price growth, from 6.1% in the fourth quarter of 2013 to 5.2% in the first quarter of this year.
However, for the third quarter in a row all 13 regions saw annual house price growth but with the South continuing to outperform the North. Outside of London, the Outer Metropolitan area was again the strongest performing region, with annual price growth of 10.6%, whilst the North continued to be the weakest English region, with prices up 5.9% over the year.
In Scotland the average home is now priced at 138,386 with Aberdeen seeing prices increase by 12% in the last year and Southern Scotland the weakest performing with price growth of 2%. Wales saw just 1.1% quarterly price growth and annual growth of 5.2%, taking the average price to 139,911. But these figures mask considerable variations. South Wales, which includes Newport, Caerphilly and Merthyr Tydfil, was the best performing area, with prices up 11% year on year while North Wales, the weakest performing area with more modest growth of 2% over the same period.
House prices in Northern Ireland were up 5.4% compared with the first quarter of 2013 taking the average price of a home to 114,495 but average prices remain around 50% below their 2007 peak. Belfast remained the most expensive area, and was the also strongest performer over the last 12 months, recording a 7% increase. Record low mortgage rates, improved availability of credit and the brighter economic outlook are all leading to increased demand for housing. However, the upturn in the supply side of the market continues to lag far behind, with the number of new homes being built in England still around 40% below pre-crisis levels and this was already insufficient to keep up with the increase in the number of households being formed, Gardner explained.
According to Peter Rollings, chief executive officer of Marsh & Parsons, the figures show that in areas like London demand is unprecedented. In South West London, we have 48 potential buyers registered for each available property. A two bedroom, ground-floor flat in Balham, initially advertised at 450,000, recently attracted
107 viewings and 53 offers. It eventually sold for 549,000, he said. In January, half of all prime properties sold in London went for more than the asking price, and one in three were snapped up within two weeks of being put on the market. 2014 may have got off to an unusually hectic start, however, we can expect the rate of house price growth to stabilise in the coming months as supply replenishes in the spring, he added.