UK Property Prices Increased By 0.6% In August 2013
The latest House Price Index (HPI) published by UK building society and leading mortgage lender, Nationwide, reveals that UK property prices are continuing to increase at a steady and sustainable pace.
Data from the Nationwide HPI show that UK property prices are now 3.5% higher than they were in 2012 and 0.6% higher than they were in July 2013, making a typical residential property now worth around £170,514 (GBP).
The data also reveals that the annual rate of residential property price growth has slowed, down to 3.5% from the 3.9% observed last month, but economists had allowed for a drop in growth because of only having a low base for comparative purposes.
The quarterly measure of UK property prices has increased by 1.4%, showing that residential property prices are rising at their strongest pace for the last three years, which could promote fears of another property bubble.
Robert Gardner, Nationwide’s chief economist said: “A number of factors appear to be contributing to the recent upturn in house price growth. Consumer confidence has increased significantly in recent months, thanks to further modest gains in employment and signs that the UK economy is finally gathering momentum. While there have been encouraging signs that house building is starting to recover, construction is still running well below what is likely to be required to keep up with demand. The risk is that if demand continues to run ahead of supply affordability may become stretched. While house prices are still elevated compared with incomes, affordability is being supported by the ultra-low level of interest rates. A typical mortgage payment for a first-time-buyer (FTB) is currently equal to around 29% of disposable income, in line with the long term average.”
Various Government schemes and incentives, such as Funding for Lending scheme (FLS) and the Help to Buy scheme due to be introduced in January 2014 will help more potential buyers to get on the housing ladder, however some economists are still wary of over inflating residential property prices as they fear that another property bubble could be far more disastrous for the UK property market.
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