Swelling house prices continue into February
UK HOUSE prices surged in February according to a major index of prices, jumping 2.4 per cent in the month alone, and up 7.9 per cent from February last year.
The monthly change is the fastest that Halifax has recorded since the first half of 2009, and February saw the 11th month-on-month increase in the past year.
“With latest data and surveys consistently show markedly rising buyer interest and strengthening housing market activity, house prices look set to see further strong increases over the coming months – especially as a shortage of available properties is exerting further upward pressure on prices in a growing number of locations,” said Howard Archer, chief UK economist at IHS Global Insight
Activity in the housing market has expanded significantly in the past year, with over 100,000 homes sold in January, an increase of 30 per cent from the beginning of 2013.
Though Halifax notes that house building figures currently indicate that the supply situation is improving, it still seems to be growing at a much slower pace than demand. Halifax records a lower average house price than official measures, suggesting that a typical home is selling for just short of £180,000.
“This situation is becoming increasingly precarious as housing supply is failing to meet demand especially in London and the south east. This is driving house price rises in these areas at a much faster rate than both inflation and wages, pushing the prospect of property ownership further out of reach for first time buyers,” said Jeremy Duncombe, director of Legal & General’s mortgage club.
The strength of the housing market led Bank of England governor Mark Carney to withdraw the use of the Funding for Lending Scheme for mortgages last November, limiting the scheme to business lending alone.