14 consecutive months! The latest house price index from Nationwide revealed that UK house prices are up 14 months in a row, almost beating the historic rates witnessed in 2007.
According to figures published by the financial institution, house prices gained 0.6% in monthly terms and 9.4% over the same period of the previous year. The increase brought the average home price to £177,846, up from £176,491 in January.
Demand for residential property continues to benefit from the record-low interest rates, the greater access to financing and the improving consumer sentiment propped up by the solid gains in employment observed in the last couple of months, Nationwide’s chief economist, Robert Gardner, commented.
The shortage of housing inventory is still another factor pushing price growth, as housing completions remain lower than levels seen before the crisis, Gardner said. Last year, for instance, there were just 109,500 new homes built in England, or 38% less than in 2007, and 50% short of the projected levels of household formation each year going forward, he added.
Gardner also commented on speculations around the growing role of cash buyers in the housing market, noting their increasing slice is more likely a result of the steep fall in mortgage-funded transactions. The share of cash transactions has been expanding since 2008 and perhaps reflects the tighter credit conditions that have been curbing buyers’ desire to fund their purchase with a mortgage loan.