House prices in the United Kingdom leapt by 10.9 per cent year-on-year in April marking the first time in four years that annual growth in values has reached double figures, a major building society reports.
Property prices across the UK lifted by 1.2 per cent on the previous month to reach 183,577 on average, increasing the risk that people will have to stretch their mortgage borrowing, Nationwide Building Society said on Thursday.
The last time that the annual house price growth reached the 10 per cent mark was in April 2010.
Robert Gardner, Nationwide’s chief economist, said housing market demand from potential buyers is “likely to remain robust” amid growing consumer confidence in the economy generally and mortgage rates remaining close to all-time lows.
Gardner said: “Earnings growth is beginning to pick up, with wage increases finally outpacing the rise in the cost of living in February.
“Nevertheless, house price growth is outstripping income growth by a wide margin. The risk is that unless supply accelerates significantly, affordability will become stretched.”
Gardner said the upturn in new house building is continuing to lag behind the growth in demand from potential buyers, with the number of new homes being built in England still standing at around 40 per cent below its pre-crisis levels.
The imbalance between the growth in the supply of homes on the market and rising buyer demand is helping to put an upward pressure on prices.
Some critics of the government’s flagship Help to Buy scheme to give people with small deposits a helping hand on the property ladder have argued this has added to the pressure on house prices by fuelling buyer demand further.
In London in particular, strong interest from wealthy overseas investors has been helping to push up demand.
Gardner said: “Interestingly, price growth in London and the South East appears to be being driven by the top end of the market, with higher priced locations recording stronger price growth…