InvestmentsJan 8 2014

House prices jump 7.5% in 2013: Halifax

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In 2013, UK house prices grew by 7.5 per cent although they fell by 0.6 per cent in December, data from Halifax’s latest house price index has revealed.

House prices in the final three months of 2013 were 1.9 per cent greater than in the previous quarter, taking the average price of a property to £173,467.

Martin Ellis, housing economist of Halifax, said consumer confidence is improving which should signal further property sales in 2014, “therefore supporting housing demand”.

He said: “Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months.”

However, Mr Ellis added continuing pressures on household finances, as earnings continue failing to keep pace with consumer price inflation, will constrain demand.

This may dispel fears that the government’s Help to Buy scheme, which has now entered its second phase, is inflating a new property bubble.

Mr Ellis said: “The recent strengthening in house prices is increasing the amount of equity that many homeowners have in their home. This will potentially encourage and enable more owners to put their property on the market for sale over the coming year, therefore boosting supply.

“Indeed, our consumer confidence research shows that there has been a significant improvement in sentiment towards selling in recent months. These factors should help to curb the upward pressure on prices.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said increasing property prices have fuelled fears that if they don’t act now, they will be priced out, while falling unemployment has also raised concerns that interest rates will rise sooner rather than later.

He said: “‘But there is no need to panic. It is still highly unlikely that interest rates will rise in 2014, despite unemployment falling faster than predicted and the economy recovering at a quicker rate.

“We are still very much in recovery mode and it’s unlikely that the Bank of England will risk raising interest rates too soon.

‘Lenders are keen to have a strong first quarter and continue to offer some extremely attractive mortgage rates.

“With the Mortgage Market Review set to be introduced at the end of April, this will likely lead to a slowdown in lending as lenders get to grip with the changes they need to introduce. Lenders are therefore trying to get ahead of the game so now is a good time to secure a competitive deal.”