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UK house prices show biggest annual rise since June 2007 - Nationwide
May 1, 2014 / 6:01 AM / 4 years ago

UK house prices show biggest annual rise since June 2007 - Nationwide

LONDON, May 1 (Reuters) - British house prices rose much faster than expected last month to record their biggest annual rise since the start of the financial crisis, data from mortgage lender Nationwide showed on Thursday.

House prices rose 1.2 percent last month alone, Nationwide said, up from an upwardly revised 0.5 percent in March and far outstripping expectations in a Reuters poll for a 0.7 percent increase.

The average price of a house in Britain now stands at 183,577 pounds ($310,000), 10.9 percent higher than a year ago and the biggest annual rise since June 2007.

The latest spurt is likely to add to concerns that Britain’s housing market recovery may get out of control, despite measures introduced late last month to impose more stringent affordability checks on home-buyers.

“Underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further,” said Robert Gardner, Nationwide’s chief economist.

Unadjusted for inflation, house prices in the first three months of 2014 were 2 percent lower than the pre-financial crisis peak, though in London they were 20 percent higher.

As in previous months, Nationwide warned that the lack of new houses to meet demand would continue to pressure prices.

“The risk is that unless supply accelerates significantly, affordability will become stretched,” said Gardner.

The BoE has said it would target mortgage lending directly before raising interest rates for the whole economy if house price rises threaten to get out of control.

On Wednesday, its outgoing chief economist Spencer Dale said that Britain’s housing market was not showing signs of being in a price bubble at the moment but that policymakers “should be nervous” about the pace of the recovery. ($1 = 0.5922 British Pounds) (Reporting by Andy Bruce; Editing by Andrew Heavens)

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