29 Apr Forget general election jitters – house prices are on the up
House prices in Britain have risen by 1pc, the biggest monthly gain since June 2014 – the height of the UK’s last mini property bubble.
Despite the general election, the prospect of which has both paralysed the luxury housing market and cooled mainstream activity over the last eight months, the annual rate of house price growth has finally started to climb, according to Nationwide.
New data from the lender showed that house prices rose 1pc from March to April to £193,048, the largest rise since June last year, when the London and the South East, in particular, were in the throes of a pre-recession spike in sales.
While fluctuations are to be expected on a monthly basis, this rise is backed up by a change in direction of the annual house price growth rate, which dipped from 11.1pc in August, to 9.4pc in September, with incremental monthly declines ever since.
The pace of annual price inflation, one of the most telling indicators for the direction of the market, picked up from 5.1pc to 5.2pc from March to April.
House prices on the up
Stricter lending policy and a natural slowdown following a post-downturn surge in demand, combined with high house prices and sluggish wage growth to cool the housing market in the final half of 2014. Political uncertainty is still holding transactions back, according to Nationwide.
Robert Gardner, Nationwide’s chief economist, said: “The pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months. Indeed, the number of mortgage approvals is still well below its long run average and 20pc below the levels recorded in early 2014.
“The strength of the economy and relatively subdued pace of activity in the housing market remains something of an anomaly. It is possible that heightened uncertainty ahead of the election is weighing on activity.”
He added that a decrease in unemployment and low mortgage rates should underpin further growth in the coming months.
Economist, Howard Archer, said: “There are increasing signs that the housing market is now starting to firm after weakening appreciably through the second half of 2014.
“We expect housing market activity to gradually pick up over the coming months. Meanwhile, a current shortage of properties coming on to the market seems to be providing increasing support to house prices. Consequently, we expect house prices to rise by around 5pc over 2015.”
However, the upper echelons of the property market, particularly in London, are still stagnating, paralysed by the fear of a Labour victory and the subsequent tax implications. Sales of homes worth more than £2m are expected to surge if the Conservative party wins power in May.