The Halifax index suggests that UK house prices are now back to where they were in April 2008, at an average of £184,464. Other indexes indicate that average prices have already surpassed their pre-crisis record levels.
Unusually, the Halifax reported a surge in prices between April and May, with a jump of 3.9 per cent. Other sources have reported a slight slowing of growth in recent months, with the onset of a new set of regulations, the Mortgage Market Review.
However, this surge in prices followed declines of 1.2 and 0.3 per cent in March and April respectively. Across the last quarter, prices rose only by two per cent, a slower increase than the previous three.
“More houses need to be built to re-establish a balanced market. This is important to help ensure a sustainable recovery. A minimum of 250,000 homes need to be built every year to meet this demand, but we are currently only constructing around half that figure,” said Stephen Smith, director of housing at Legal & General.
Stephen Noakes, mortgage director at Halifax, added that there were some positive indications from the construction sector: “There are signs of a revival in housebuilding, which should bring supply and demand into better balance and curb upwards pressure on prices over the medium and longer term.”
In three weeks, the Bank of England’s financial policy committee issues its twice-yearly update on financial stability. Analysts have previously suggested that if the Bank wishes to use new macroprudential tools to cool the frothy housing market, the June meeting may be an appropriate time.