House prices surged by 6.5% over past year, Nationwide reports
Latest monthly increase of 0.6 per cent took average UK house values to £174,566
House prices are now rising at 6.5 per cent a year, marking the fastest annual increase seen in three years, according to figures by Nationwide.
The building society, which is the UK’s second largest mortgage lender, said that the average price of a house or flat in the UK is now £174, 566. Prices have been rising every month for the last year and are up from 5.8 per cent a month ago.
The annual increase is the strongest since July 2010, but Nationwide said prices are still around six per cent below an all-time high recorded in late 2007.
However, on a monthly basis, prices increased slightly slower than in October, when figures rose by one per cent in one month.
Yesterday, the Bank of England took the first step in putting the brakes on the surging property market with its decision to stop Funding for Lending (FLS) for household mortgages.
Governor Mark Carney said the FLS incentive was no longer needed amid rising house prices and, from January, it would instead be focused on business lending.
Under FLS, banks and building societies have been able to borrow money cheaply on the condition that they lend it out to individuals and businesses, and experts said yesterday that the move could spell the “beginning of the end” for ultra-cheap mortgage deals.
Fears of a looming property bubble have been growing in recent months amid a series of reports suggesting that demand in the housing market far outstrips the growth in the supply of homes.
Land Registry figures released yesterday showed that house prices in London were up by 8.7 per cent year-on-year in October. However, prices in the North East have dropped by 3.1 per cent in the same period.
Robert Gardner, Nationwide’s chief economist, said that that a large part of the uplift in the housing market is down to improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers.
He also highlighted the impact that low mortgage rates have had on borrowers' costs.
Mr Gardner said: "Mortgage rates have declined significantly from the already low levels prevailing last year.
"For example, Bank of England data indicates that the interest rate on two-year fixed-rate mortgages for those with a 10 per cent deposit has fallen from 5.6 per cent to 4.4 per cent over the past 12 months.
"For a buyer purchasing the typical UK home over 25 years, this equates to a reduction in monthly payments of around £110 (£1,320 per year) at the current average house price."
Additional reporting by PA
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Shock poll shows voters believe Ukip is to the left of the Tories
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...