U.K. house prices rose in December and will extend gains in 2014, led by London and southeast England, Hometrack Ltd. said.
Values across England and Wales increased 0.5 percent from November, the London-based property researcher said today. In 2013, prices jumped 4.4 percent, rebounding from a 0.3 percent decline the previous year. London and the southeast registered the highest growth, up 9.1 percent and 5 percent respectively. Prices in northern England fell 0.5 percent.
“The strongest market conditions and impetus for price inflation is set to remain focused on southern England,” Hometrack said in a statement. “A broader-based recovery in the housing market is dependent upon growth in the real economy, jobs and household incomes.”
The mismatch between supply and demand that helped to drive prices higher this year will persist in 2014, according to Hometrack. It said the market is also supported by the government’s Help to Buy program, which is aimed at helping homebuyers with small down payments.
In 2013, demand rose 25 percent, the fastest in three years, while the supply of homes for sale increased 6 percent, the slowest pace in the 12 years Hometrack has been recording the data. The revival in the property market prompted the Bank of England to step in last month to cool momentum, and Governor Mark Carney has said policy makers are monitoring the situation.
Mortgage lender Halifax has forecast that home values will increase between 4 percent and 8 percent next year.
There is “little current sign of the excessive behavior associated with a house price bubble,” Halifax said on Dec. 23. “The authorities are also on guard to take action in the event of signs of overheating.”