The start of 2014 has proven to be very positive with further rises in house prices, continuing the increases seen in 2013. In the month of January UK house prices increased by of 0.7% compared to December 2013 and 8.8% over the whole year.
- Increase of 0.7% in UK house prices in the month of January, compared to December 2013
- An increase across the year of 8.8% compared to January 2013
- UK house prices are just 4% below their 2007 peak.
- The average UK house price is now set at £176,491
Commenting on the figures, Robert Gardner, Nationwides Chief Economist, said:
“The housing market is continuing to gather momentum on the back of further solid gains in employment, record low mortgage rates and rising confidence. House prices recorded their thirteenth successive monthly increase in January, rising by 0.7% on the month. The price of a typical home was 8.8% higher than January 2013.
Halifax has stated that they see first time buyer activity on the up and as the lifeblood of the market, encompassing 40% of the mortgage transactions and helping to complete chains. This has obviously been helped by the Help to Buy schemes rolled out during 2013 by the government.
Although the comparison of the cost of these homes compared to earnings is quite high, at 4.6 times the average earnings, compared to the 20 year average, this is still below the 5.4 times earnings seem in 2007.
“There is less scope for buyers to reduce monthly payments by opting for an interest only mortgage, as these products are less readily available (interest only accounted for 2% of
new lending to first time buyers in November, down from a peak of 37% in September 2007).
“However, there is a trend towards borrowers lengthening the term of their mortgage, with 52% of mortgages currently over 25 years, up from 40% in 2007. This may, in part be to
lower their monthly repayments, though the shift may also reflect that people are both living and working for longer.