Nationwide: house price growth at 13-month high

UK annual house price growth increased to 5.7% in March - the strongest pace since February 2015, according to the latest Nationwide house price index.

Related topics:  Finance News
Rozi Jones
1st April 2016
house growth graph this is actually the green one

On a monthly basis, house prices rose by 0.8%.

Nationwide's Chief Economist, Robert Gardner, said that the figure had lifted the pace of annual price growth out of the fairly narrow range of 3-5% that has been prevailing since the summer.

Gardner added:

“There has been a pickup in housing market activity in recent months, with the number of housing transactions and mortgage approvals rising strongly. This is likely to have been driven, at least in part, by upcoming changes to stamp duty on second homes, where buyers have brought forward purchases in order to avoid the additional tax liabilities.

“The pace of house price growth may moderate again once the stamp duty changes take effect in April. However, it is possible that the recent pattern of strong employment growth, rising real earnings, low borrowing costs and constrained supply will keep the demand/supply balance tilted in favour of sellers and maintain pressure on price growth in the quarters ahead."

Additionally, for only the fourth time in five years, London did not record the strongest rate of price growth, with the Outer Metropolitan region occupying the top spot in Q1.

However London still recorded the second fastest rate of growth, with prices reaching a new all-time high of 52% above pre-crisis levels (compared with 9% for overall UK house prices).

Overall, the pace of house price growth moderates from the south to the north of the country, with the North of England and Scotland recording modest house price declines in Q1.

Mark Posniak, Managing Director at Dragonfly Property Finance, commented:
 
"The divergence between average prices in the North and South has become so extreme that the two are less divided than detached. With London having effectively priced itself out of the market, it's no surprise that the Outer Metropolitan commuter belt is outperforming. If they can't live in London, people are opting to live just outside or within a commutable distance.

He added that more homes may come onto the market in April as anyone considering selling will do so in advance of the EU referendum.

Posniak concluded:
 
“As we edge closer to the referendum and potential Brexit, caution among buyers is likely to rise and demand may taper off. With buy-to-let brought to heel and Brexit potentially looming, where prices are going next is becoming increasingly hard to predict."

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