We were excited to discover that the rise in first-time buyers in January was the major driving force behind an 8.8% rise in house prices compared to January 2013. Figures from the Nationwide Building Society House Price Index show that compared with December, house values rose 0.7%, achieving their 13th monthly increase in a row.
The average house price stood at £176,491 in January, up from £175,826 the previous month.
Nationwide’s chief economist, Robert Gardner, commented that the momentum was a result of increasing employment, low mortgage rates and rising confidence. It was also reassuring to see a growing number of first-time buyers, who are the “lifeblood” of the housing market, he said.
First-time buyer activity improved 32% in the third quarter of 2013 compared to the same quarter of the previous year, as 73,700 people bought their first homes. They were responsible for roughly 44% of housing market activity in the period, nearly touching a record-high level as a percentage of lending activity.
Nationwide noted that the average house price for first-time buyers is 4.6 times the average earnings. The rate is still below the peak level of 5.4 registered in 2007, but higher than the 20-year average of 3.6 times the average earnings.
Gardner warned, however, that borrowers should be ready for a possible increase in interest rates, which may be dictated by the improving labour market.
Data from HMRC further confirms that housing market activity is approaching “more normal levels,” the society said. According to its figures, the number of transactions on the market jumped 30% to 103,000 in December, compared to the same period of 2012.
Do you find these figures encouraging? If you’re a first-time buyer, excited at the idea of owning your first home, Emoov can help.