Interesting figures released by Nationwide Building Society reveal that UK house prices increased by 0.6% in November 2013, with the average house costing £174,566 in November compared to £173,678 in October 2013.
This brings the annual rate of increase in prices of UK homes to 6.5%, which is the strongest rate of increase since July 2010, according to Nationwide’s Robert Gardner. He did also point out, however, that prices in the UK are still around 6% below the peak of late 2007.
Mr Gardner attributes the increase in part to improvements in the labour market and increasing confidence in the economic outlook.
“Policy measures aimed at keeping down the cost and improving the availability of credit are also playing an important role. Indeed, mortgage rates have declined significantly from the already low levels prevailing last year,” he commented. “For example, Bank of England data indicates that the interest rate on two year fixed rate mortgages for those with a 10% deposit has fallen from 5.6% to 4.4% over the past twelve months.”
At the same time the Bank of England announced that it was re-focussing its Funding for Lending (FLS) scheme away from the housing market, with incentives in the scheme to be skewed heavily towards lending to small and medium-sized businesses in the future.
The Bank of England believes that although the growth in household loan volumes remains modest, activity in the housing market is picking up and house price inflation appears to be gaining momentum. As a result it considers that there is no longer a need for the FLS to provide further broad support to household lending.
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