UK house prices increased by 8.4 percent in 2013, according to new information from Nationwide – the largest building society in Britain.
The increase translates into gains of £1,131 a month, with the average house increasing in value from £162,245 to £175,826.
The recovery appears to be mainly occurring in the South-East of the country although it is beginning to spread to other areas of the country (as north as Yorkshire).
House prices in the South-East increased by 7.6 percent, up from an average price of £198,009 to £213,007, compared to a 1.9 percent increase in the North, from an average price of £114,264 to £116,417.
London home prices increased in value the most, increasing in value from an average price of £300,361 to £345,186.
Is there a UK housing bubble?
Many believe the UK housing market is in a bubble. One of the main indicators of a housing bubble occurring is by comparing
However, Robert Gardner, Nationwide’s chief economist, highlighted how the UK’s low interest rates are making mortgage payments affordable:
“Affordability is being supported by the ultra-low level of interest rates. A typical mortgage payment for a first-time buyer is currently equal to around 29pc of take-home pay, close to the long-term average. However, the risk is that if demand continues to run ahead of supply in the quarters ahead, affordability may become stretched. House price growth has been outstripping average earnings growth since the middle of the year.”
Howard Archer, chief UK and European economist at IHS Global Insight, said that the data will “only fuel concern that a new housing bubble could really develop in 2014, especially as the strength in house prices is becoming widespread”.
“We expect house prices to increase by around 8% in 2014, with gains across the country. Furthermore, there is a very real possibility that this could prove to be a conservative forecast. Consequently, the decision of the Bank of England and the Treasury to end Funding for Lending support for lending to households from January looks a highly sensible decision, although in itself it is unlikely to act as a major brake on housing market activity.”