UK Average House Price At All Time High
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UK Average House Price At All Time High

24 June 2014, by Dan Clay house prices

The end of last month saw house prices surpassing the pre-financial crisis ‘peak’ after 13 months of consecutive growth- with the average UK house price now at £186,512 showing a 13.1% increase compared to May 2013. These new figures have outdone the previous record set in October 2007 when the average house price reached £186,044 across the UK.

Although May set the new record for average housing prices, the month only saw an increase of 0.7% compared to the 1.2% increase seen in April, suggests the rate of growth is starting to slow- although this could simply be an anomaly. Either way house prices are still rising even if it is at a slightly slower rate.

According to The Independent, Nationwide's chief economist Robert Gardner pointed to "tentative signs" that activity in the housing market "may be starting to moderate" but warned that it is too early to say whether this is indicative of a cooling trend in the wider market. "The slowdown may partly be the result of the introduction of Mortgage Market Review measures, which may take a few months to bed down” he added. "However, with mortgage rates close to all-time lows and labour market conditions continuing to improve, underlying demand for homes is likely to remain strong."

The increase in housing prices is in turn having an extreme effect on first time buyers as they are having to raise huge deposits to secure themselves a place on the property ladder. According to the Telegraph, newcomers to the housing market put down £9.4bn in deposits over the 12 months to the end of March, an increase of 81% from the £5.2bn raised in the year to October 2007, when Nationwide's average UK property price was last at the same high level of more than £186,000. Nationwide's chief economist, Robert Gardner, said first-time buyers were playing an increasingly important role in the housing market recovery. They accounted for 48% of purchases in March – a record high, and above the long-run average of 38%.

The government's Help to Buy and Funding for Lending schemes were both designed to assist first-time buyers by making lenders more willing to offer mortgages, particularly to those with small deposits. Recent figures suggest Help to Buy has been hitting its target, with 80% of borrowing done by new entrants to the market. But in parts of the country where the housing market is growing the quickest the scheme is assisting the smallest percentage of loans. It is unlikely that the Help to Buy scheme is the main factor for the growth, playing more of a supporting role rather than a starring role in the increase.

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