Annual house price inflation rose again in the three months to March this year compared to the same point last year, taking it to its largest value since October 2007, the Halifax have identified.
In their latest comparison report of house prices in the UK, the Halifax highlighted that property prices have risen by a monumental 8.7% in the 12 months to March, which represents a 7 year high that was last witnessed on the eve of the crash of Northern Rock.
However, their report also indicated that the average property price had actually fallen in March by 1.1% compared to the month before, which marks only the third time in the past fifteen months that prices have actually taken a downward trajectory.
It means that the average house price in the UK now stands at £178,249, though the Halifax did point out that whilst prices were down on a monthly comparison, that nevertheless on year on year quarterly growth comparisons, they were sharply up in 2014, with a 2.3% being identified for price rise movements in the first three months this year compared to the last.
The Halifax comprise of one many lenders who release regular indexes that estimate the movements of house prices, though their methodology of doing so for their latest report has been distinct as it utilised the quarterly averages on price rises from 2013 and 2014 to formulate the basis of their analysis.
And the 2.3% annual rise between the first quarter of 2013 and 2014 has spurred the Halifax to warn that larger and more volatile price rises could be on the horizon, which will fuel pre-existing fears that a possible housing bubble could occur sometime in the near future.
ëVery real riskí
Earlier this week, Halifaxís lending counterpart Nationwide released their own data on the property market that indicated that house prices in the capital of London had increased by a staggering 18% in the last 12 months, which is even more alarming considering that house prices and the general cost of living is far higher in the capital than across the rest of the UK.
And business secretary Vince Cable conceded that the results reflected the reality that house prices are getting increasingly out of reach for middle income workers in the UK, and argued that unless supply levels were addressed, that this trend would continue due to the revitalisation within the mortgage market.
“The fundamental problem is a chronic imbalance between supply and demand. A recovering mortgage market is just fuelling demand again,” said Mr Cable.
“A family on average income is nowhere near able to afford a house at the average price. Property has become much more unaffordable for people on middle incomes.”
The Halifax have attributed the soaring prices to the improvement in the countryís economic performance, the monumental drop in the unemployment rate last year , and renewed consumer confidence in the property market that has been incurred due to interest rates being retained at their historic low of 0.5% for an extended period of time now.
However, despite their identification that house prices could continue to be volatile over the next year, they have also moved to allay fears by pointing out that homeowners will be boosted by higher equity with their houses due to the rises, which will encourage a number of them to place their property on the market to acquire maximum profit on their investment, and this will ease pressure on supply and bring down prices organically.
Halifax director, Stephen Noakes, said: “The recent strengthening in house price is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply and easing pressure on prices”.
Howard Archer, chief UK economist at IHS Global Insight, said that the latest price figures from both the Halifax and Nationwide were positive and displayed that perhaps prices are beginning to stabilise, though he did call for policymakers to continue monitoring the situation within London, where price rises are a great deal more steep and impactful.
Mr Archer added: “While the softer house price data for March reported by both the Halifax and the Nationwide, and the slowdown in mortgage approvals reported by the Bank of England in February, may slightly ease concerns of a house price bubble developing outside of London (where there is one already), it remains a very real risk and something that policymakers need to closely monitor and be fully prepared to react to.”
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