However, hopefully this is good news for distributors and manufacturers of building products, as it is clear that demand is currently ahead of supply and housing stock needs to catch up in the coming months. This is vital, otherwise it is likely that affordability of housing may become a major problem and this could damage the recovery.
Although low interest rates and initiatives like Help to Buy are helping the market, house price growth is heavily outstripping average earnings, which again underlines our view that now is the time for salaries to increase to help the building industry as well as the general economy. We do not want another housing bubble to be created, new homes must be built to keep the market stable and accessible to potential buyers of all incomes.
Summary of Nationwide's findings
- Prices rose by 1.4% month-on-month in December to £175,826 on average, although still 5% below all-time highs recorded in late 2007.
- The annual increase in prices across the country is the biggest jump seen since June 2010. Every region across the UK saw prices increase year-on-year, ranging from a 14.9% annual increase in London to a 1.9% uplift in the North.
- Manchester is the best-performing area for house price rises in 2013, with prices up by 21% typically over the last year to reach £209,627.
- Carlisle was the worst performer, with a 1% annual increase in prices taking the average value of a home there to £136,128.
- Prices in London are now 14% above their annual peak, with the price of the typical home in the English capital having reached £345,186.
- House prices in Northern Ireland are still around half their 2007 levels, although they have climbed by 7% year-on-year to reach £111,612 on average.
- London has the most expensive house prices in the UK while Northern Ireland has the cheapest
- Scotland recorded a 3.7% annual increase in house prices, pushing them to £136,729
- Wales saw prices pick up by 6.1% over the same period, taking the average price there to £139,722.
- In England, prices have increased by 8.6% year-on-year to £205,084