House prices in the latest three months (November 2013-January 2014) were 1.9% higher than in the preceding three months (August 2013-October 2013). This is within the range of 1.8 - 2.1% recorded for this measure throughout the preceding eight months to June 2013.
Prices in the three months to January were 7.3% higher than in the same three months a year earlier. This was marginally lower than in December (7.5%)
House prices increased by 1.1% in January. This followed a small fall in December (-0.5%).
Activity is on an upward trend with housing transactions in 2013 exceeding one million for the first time since 2007. Home sales rose for the ninth successive month in December to 103,040; 30% higher than in December 2012.
The number of mortgage approvals for house purchases – a leading indicator of completed house sales – was 9% higher in the three months to December thanin the previous quarter and 30% higher than in the same three months of 2012.
Lack of supply coming on to the market adding upward pressure on prices. The number of homeowners providing instructions to put their property on the market for sale increased only marginally at the end of 2013. However, this increase is still some way short of the number of new buyer enquiries.
Commenting, Martin Ellis, housing economist, said:
"House prices in the three months to January were 1.9% higher than in the previous three months. The annual growth in prices fell slightly compared with last month with prices in the three months to January 7.3% higher than in the same period last year.
"With the supply of properties being slow to respond to more buoyant market conditions, stronger demand has resulted in continued upward pressure on house prices. Demand has increased against a background of low interest rates and higher consumer confidence underpinned by signs that the economy is recovering and unemployment falling faster than expected. Official schemes, such as Help to Buy, also appear to have boosted housing demand. However, continuing pressures on household finances, as earnings fail to keep pace with consumer price inflation, are expected to remain a constraint on the rate of growth of house prices."
Nicholas Ayre, managing director of homebuying agency Home Fusion, says:
"With house price growth at 7.3 per cent buyers are considerably more optimistic than they were this time last year. Many are still concerned about the ‘bogy’ of an interest rate rise, although that is a tough call to tell when Mark Carney, governor of the Bank of England, will make his move. The same upward pressure on house prices is being felt, as supply constraints don’t appear to be ending anytime soon.
"We have broken through the one million transaction threshold for the first time since 2007, which we always see as the darkest days and has come to represent our reference point when everything went horribly wrong. We are moving way beyond that now. We have reached a point at which buyers are now thinking very hard about taking the plunge and this may now be starting to temper demand. The spectre of overpaying and the thought of negative equity could well be in the back of people’s minds.
"The definition of a house price bubble, is when people will pay anything for a property. This is not what we are seeing here. Many people are still heavily indebted, particularly if they have maxed out on credit cards. Growth at 1.9 per cent over the previous three months and annual price growth falling slightly when compared with the previous month, is hardly a market running away with itself."
