House prices see strong start to year
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House prices rose by 1.2% in January putting the average house price at £163,481, according to the latest house price index from Nationwide.
House prices are up 8.6% compared to this time last year.
Martin Gahbauer, chief economist at Nationwide, predicts that unless property values fall next month annual house price growth will hit over 10% for the first time since May 2007.
He says: “Although there may still be some upward revisions to the initial estimates of economic growth, this won’t change the fact that the rebound in the housing market - and particularly house prices - has gone some way beyond the recovery in the overall economy.”
But Gahbauer adds that pay cuts and pay freezes will mean any increase in house prices will make it harder for buyers and home owners, especially since interest rates are unlikely to fall any further.
He says this limits the benefits of the continued house price recovery.
Yet he acknowledges that pay restraint has allowed more people to stay in work and keep up with their mortgage payments.
He adds: “As a result, relatively few households have been under financial pressure to sell their homes into what remains a relatively weak demand environment.”
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