UK house prices rose in 2013 fuelled by first time buyer demand, say Nationwide, raising the average house price to £176,500.
Rises were due in part to higher employment, but also continued low mortgage rates and increased confidence from first time buyers and home movers.
The government’s Help to Buy and Funding for Lending have also made more money available to lenders.
House price inflation was 4.4% last year, but was high in London and the South East of England where prices were up by 11.2% year on year.
Prices in Manchester rising strongly
The average home in the UK is now 4.6 times average earnings, with further prediction of 4 – 8% growth in 2014.
Although the focus has been on London last year, it is Manchester where prices are higher for 2013 with a 21% rise to an average of £209,627, says the Nationwide.
London property prices were 13% higher, Leicester 11% and Birmingham 10% all showing strong demand.
House prices in these cities are likely to rise further and benefit existing homeowners such as remortgage buyers as giving them an opportunity to release capital which they can use to improve their home.
Higher property values for older homeowners allows the equity release buyer to access wealth using a lifetime mortgage to improve their quality of life, home and garden improvements or pay university fees for grandchildren.
Not all house prices are rising
The situation is not the same throughout the country however. In Yorkshire and the Humber, house prices actually fell by 1.2% in December and were up by only 0.5% annually.
The London borough of Hackney’s recorded highest price rises closely followed by Waltham Forest in north-east London and Wandsworth in the south-west.
Many people cannot afford to buy a property and buy-to-let landlords have been able to generate yields from the growing rental market.
Howard Archer, chief UK economist at IHS Global Insight, voiced concerns that a new housing bubble could really develop in 2014.
“At this stage though, only the pace of house price rises in London is really a serious cause for concern.”
Robb Campbell, Shelter’s chief executive, demanded government action to bring on affordable homes, stating that prices were “continuing to spin out of control”.
What are your next steps?
Call our LCM mortgage brokers if you are a buy-to-let landlord with a property, remortgaging and want the best mortgage deal, buying your first home or you are planning to move home.
For equity release buyers our London City Mortgage advisers can recommend lifetime mortgages allowing you to receive cash from your home to spend on anything such as holidays or even help your children start or expand a business.
Start with a free mortgage quote or call us and we can take your details. Learn more by using the mortgage cost calculators, property value tracker chart and equity release calculator.
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