Apr 03

House price growth moderates in March

UK house prices increased by 0.4% in March and were 9.5% higher than March 2013 according to the latest Nationwide House Price Index.

House prices are now around 3% below their 2007 peak.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said:

“There is little doubt that the recovery in the housing market is now firmly established, with activity levels picking up and house prices recording their fifteenth successive monthly increase in March.

“There are some tentative signs of moderation, with the monthly pace of price growth slowing to 0.4% in March down from 0.7% in February and 0.8% in January. Nevertheless, viewed in annual terms, price growth is continuing to run at a robust pace, with the price of a typical home 9.5% higher than in March 2013.

“Record low mortgage rates, improved availability of credit and the brighter economic outlook are all leading to increased demand for housing. However, the upturn in the supply side of the market continues to lag far behind, with the number of new homes being built in England still around 40% below pre-crisis levels (and this was already insufficient to keep up with the increase in the number of households being formed).

“There is further evidence that the upturn in the housing market is gaining momentum across the UK. For the third quarter in a row all thirteen regions saw annual house price growth in Q1 2014. However, the pattern of the southern regions recording the most rapid price gains, especially London, remained very much in evidence.

“London house prices were up 18% year on year in Q1, taking the price of a typical home in the capital to £362,699 – more than twice the level prevailing in the rest of the UK when London is excluded. Indeed, the gap between house prices in London and the rest of the UK is the widest it’s ever been, both in cash and percentage terms, as shown below.

“Overall, the southern regions have been outperforming for some time, with the result that house prices in London, the Outer Metropolitan and Outer South East have now surpassed their pre-crisis peaks. Similarly, East Anglia and the South West are less than 5% below their 2007 highs. By contrast, the North of England, Wales, Scotland and Northern Ireland still have more ground left to recover.”