The Nationwide Building Society have been the first major mortgage lender to throw in its statistics for the New Year, and it continues to be good news for homeowners. Its data shows that prices rose by 1.2% in January and that house prices are up 8.6% year-on-year. The average value of a typical UK property is now £163,481. Unless there is a fall in property values in February, we could be looking at a double-digit value in house inflation for the first time since May 2007. However, the three month on three month rate of change (seen as a more reliable indicator) was down slightly at 2.1% from the 2.3% cited in December.
In his summary, Martin Gahbauer, the Nationwide’s Chief Economist commented on recent economic news that has affected the housing market: “The news that the UK economy finally emerged from recession in the fourth quarter of 2009 was in many ways a mixed bag. Although it is clearly encouraging that economic activity is no longer falling, it remains a long way below the pre-recession level and is not yet growing convincingly. 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.”
He went on to comment about the improvement in the labour market, citing the fact that unemployment fell in November for the first time since February 2008 and that December continued to see a welcome reduction in the numbers claiming unemployment benefit. However, he astutely points out that these headline figures, that have been announced by the Government to some fanfare, hide a more sinister side to the job market. This, being the fact that many employers have decided to freeze their employee’s pay or even reduce it. Throughout 2009, average earnings growth has fallen to the lowest levels on record; this, coupled with every rising house prices worsens housing affordability.
The other big mortgage lender in the country, Halifax, have yet to release their figures for January, but their most recent index showed that house prices had risen by 1.0% in the month of December. This was the sixth consecutive monthly rise in the bank’s figures and shows house prices at an average value of £169,042; up 9.4% since reaching a low in April 2009.