Property prices continue to soar as Nationwide report 0.6% rise in February
Property prices continued their astonishing upwards trajectory, with Nationwide Building Society identifying that they rose by 0.6% in February this year, the fastest rate in four years.
The rise means that the average property of a property in Britain now stands at £177,846, which although is ever rising is still nearly 5% less than it was at its pre-recession peak back in 2007.
Nationwide identified that the prices of property were being inflated by soaring demand in the market, which itself has been driven by rising employment, exceptionally low rate mortgages and looser criteria to fulfil when applying for a secured loan.
Nationwideís chief economist, Robert Gardner, identified that property prices will likely to continue to soar at an even faster rate over the course of the upcoming months, but played down the likelihood of a ëhousing bubbleí occurring as a result of rising demand.
"If you look at prices relative to earnings then housing does look relatively expensive by historic standards," said Mr Gardner.
"But if you look at how much it costs to service a typical mortgage that suggests that housing isn't overly expensive at this point due to interest rates currently being at such low levels."
Nationwide also highlighted that a lack of supply to match the soaring levels of demand is significantly contributing towards the upwards trajectory in hose prices.
"Price growth is being supported by the fact that the supply of housing remains constrained, with housing completions still well below their pre-crisis levels," said Mr Gardner.
Mr Gardner pointed out that around 110,000 new properties were constructed in England over 2013, which was almost 40% lower than the house building levels recorded back in 2007, and around 50% lower than the targets set by the government at the start of the year.
He added that just 109,500 new homes were built in England in 2013, which was 38% below the level recorded in 2007, and about half the projected number of new households expected to form each year.
Meanwhile, Londonís property problems continued, with the average price of a home in the capital soaring to £334,186, which is almost double the UK average.
Nationwide disclosed that property prices have now risen in the capital for the last 14 months consecutively, and did not rule out further substantial rises moving forward in the future.
House building boost
Nationwideís data comes just days after some of Britainís biggest house building companies reported huge profits for the year 2013.
Baratt Developments identified that they had attained £120 million in pre-tax profits, representing a 162% increase during the second half of 2013.
Similarly, giants Persimmon showed their profits had risen by around 50% to £337 million, whilst Redrom identified a £48 million profit margin during the same time period.
All attributed their recent upturn to the governmentís Help to buy scheme, which has sought to bolster activity in both the home purchase and house building sectors across the country.
The first phase, the equity loan scheme, was intended to encourage people to invest in house building by lowering the mortgage requirements, though so far only 15,000 properties have been created via the scheme.
Nevertheless, Nationwide forecasted that a greater number of homes will be built via the scheme during this year, as more people clamber to acquire a property whilst deposit requirements are so low and application criteria is relatively loose.
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