Messenger NewspapersHouse prices surge by 8.8% (From Messenger Newspapers)

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House prices surge by 8.8%

Messenger Newspapers: UK house prices increased by 8.8% year-on-year to reach £183,462 on average in June, Halifax said UK house prices increased by 8.8% year-on-year to reach £183,462 on average in June, Halifax said

House prices surged by 8.8% annually in June in the strongest uplift seen since 2007 as consumer confidence continues to rise, Halifax has reported.

The increase took the average UK house price to £183,462, although on a month-on-month basis prices slipped back by 0.6%, marking the fourth monthly price fall seen since last December.

The year-on-year uplift in property values has accelerated on an 8.7% annual increase recorded in May and marks the biggest year-on-year jump seen since October 2007, the figures show.

A year ago, in June 2013, house prices were increasing annually at less than half the pace they are now, by 3.7%.

The latest 0.6% monthly drop in property values marks a large swing backwards from a month-on-month increase of 4% recorded in May.

Halifax said month-on-month price changes can often be "volatile" and its quarter-on-quarter measure of price fluctuations is a more reliable indicator of what is happening in the market.

This quarterly measure revealed that the underlying direction for house prices is still pointing upwards. Property values between April and June this year were 2.3% higher than they were between January and March.

Halifax said that this measure has remained steady since June 2013, with quarterly increases ranging between 2% and 2.3% consistently recorded over the last year.

Stephen Noakes, mortgages director at Halifax, said: "Housing demand continues to be supported by an economic recovery that is gathering pace, with employment levels growing and rising consumer confidence, although real earnings growth remains sluggish."

Last week, building society Nationwide reported that its house price study was showing that values have surpassed their 2007 peak to stand at a new all-time average high of £188,903.

Nationwide said London property values have surged by nearly 26% year-on-year, leading some economists to warn that the risk of a sharp correction in prices at some point in the coming years is growing.

There have recently been signs that some of the strongest heat is being taken out of the housing market, following the introduction of toughened lending rules at the end of April, which force lenders to question home buyers and people looking to remortgage more deeply about their spending habits.

Lenders also have to apply "stress tests" to make sure applicants would still be able to afford their home loan repayments as and when interest rates rise.

Experts have said it is too soon to know whether the impact of these new rules will just be temporary, as they bed in.

The Bank of England has also recently announced new curbs on riskier lending. It has said that loans of 4.5 times a borrower's income or higher should account for no more than 15% of new mortgages issued by lenders.

The Bank also said that lenders should ensure that borrowers can keep up their mortgage repayments in the event of a rise of up to 3% in interest rates over the first five years of the loan.

Halifax pointed to figures from HM Revenue and Customs, which showed that home sales dipped to under 100,000 in May for the first time in six months, although transactions were still up by 15% compared with May 2013.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "With estate agents reporting that applicant levels are falling, fewer sealed bids and packed open houses, some moderation is returning to the market.

"As more property comes up for sale, with vendors worrying that they may have missed the boat, the heat has come out of the housing market."

He said speculation about the possibility of interest rates rising is also prompting potential buyers to act more cautiously when faced with sellers' asking prices.

Howard Archer, chief UK and European economist for IHS Global Insight, said that a limited supply of homes on the market is still likely to be a significant factor which continues to push up prices in many areas.

He said: "We currently see house prices rising by around 6-7% overall in 2015.

"Slowly rising interest rates, more stretched affordability ratios, due to the marked rise in house prices, and the Bank of England's recently announced macroprudential measures aimed at ensuring lending responsibility are seen taking some heat out of the housing market in 2015.

"In addition, it is likely that more houses will come on to the market."

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