House price momentum continues

UK house prices grew by 1.4% in December and recorded an 8.4% year-on-year increase. However prices still remain around 5% below the 2007 peak.

Robert Gardner, chief economist at Nationwide, said: “The UK housing market followed the trajectory of the wider economy through 2013, gaining momentum as the year progressed.

“A large part of the pickup in the housing market can be attributed to further improvements in the labour market and the brighter economic outlook, which helped to bolster sentiment amongst potential buyers.

“Policy measures also played an important supporting role by helping to keep mortgage rates close to all-time lows and improving the availability of credit, especially for those with smaller deposits.”

Gardner also said that the supply side of the market has not kept pace with demand despite subdued buyer numbers on historic standards.

Jeremy Duncombe, director of Legal & General Mortgage Club, agreed and said that whilst house prices look set to set to continue to rise in 2014 more needs to be done to encourage building.

He said: “There also needs to be an increase in the number of new homes being built if more people are to realise their dream of buying their own home.

“House builders, such as Persimmon and Barratt are still building fewer new homes each year than before the recession and expect this to continue until 2017 at the earliest.

“A lack of homes leads to increased competition and prices, making it harder to buy a house.”

Despite supply issues not all regions in the UK posted strong annual house price growth.

All UK regions reported annual price rises in 2013 with London leading the way with a 15% growth.

The Outer Metropolitan was the best performing region outside of the capital, with annual price growth of 8.6%.

The North remained the weakest performing English region, although it still saw a modest annual increase of 1.9%.

Amongst England’s major towns and cities, Manchester was the top performer in 2013, with prices up 21% during the year. Carlisle was the worst performing city, with a 1% increase.