U.K. House-Price Growth Accelerates to Fastest Pace in 13 Months
Prices advanced 0.9 percent, the most since August 2012, to an average 172,127 pounds ($275,700), the Swindon, England-based customer-lender said today. They climbed 5 percent from a year earlier, the biggest annual increase since July 2010.
The strengthening property market has prompted politicians including Business Secretary Vince Cable to warn that government measures to make more credit available may help stoke a bubble. While the Bank of England said this week housing activity remains at a low level by historic standards, it’s alert to any risks to stability.
“Demand is being supported by an improvement in the availability and a reduction in the cost of credit,” said Robert Gardner, chief economist at Nationwide. “The improving economic outlook is also encouraging more people to take their first steps into the property market.”
House prices rose in all 13 U.K. regions tracked by Nationwide in the third quarter. That’s the first time that’s happened since 2007. Although price increases are outpacing wage growth, affordability is being supported by low interest rates, with the average mortgage payment for a first-time buyer equaling 29 percent of take-home pay, Nationwide said.
The lender also said that while the pace of homebuilding is starting to recover, it’s still “well below” the pace needed to keep up with demand.
The Bank of England’s Financial Policy Committee said on Sept. 25 that it would “closely monitor developments in the housing market.” It said it would be “vigilant” and that it has tools such as additional capital requirements on mortgage loans and the tightening of affordability tests to address any risks.
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