House prices on the rise in the UK

House prices in the UK have continued on an upward trend, according to new figures by the Nationwide Building Society.

Its research revealed that property prices rose by 1.4 per cent in December and were 8.4 per cent higher than a year before.

However, these figures are still around five per cent below 2007 peak levels. The quarterly index revealed that the price of a typical UK house rose by 2.7 per cent in the fourth quarter of last year after allowing for seasonal variations. Prices were up 7.1 per cent over the year as a whole.

The figures also showed that the average monthly increase in house prices rose from 0.4 per cent in the first half of the year, to one per cent in the second half of 2013.

Commenting on the findings, Robert Gardner, Nationwide's chief economist, said demand for housing continues to outpace supply in many regions of the UK, leading to a rise in prices.

He said: "Part of the reason for the acceleration in house price growth is that the supply side of the market has not kept pace with the upturn in demand, even though buyer numbers remain subdued by historic standards. 

"For example, in the third quarter of 2013 the number of housing transactions in England was around 25 per cent below pre-crisis levels, while the number of new homes built was around 45 per cent lower. Moreover, even in the pre-crisis period, the pace of construction was below that required to keep pace with the increase in the number of households, adding further weight to the notion that the supply side of the market remains constrained."

Its findings were supported by separate figures by investment specialists Assetz, which earlier this month revealed that the UK residential housing market could see price growth of ten per cent.

According to the firm's analysis at the start of 2013, average yields in city centres for investors were 8.5 per cent but by the end of the year were around 7.5 per cent. In 2014, they are expected to remain at around 7.5 per cent.

Published 9th January, 2014

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