House prices rise again during February
House prices rose for the fourteenth consecutive month in February, according to the Nationwide House Price Index.The average price of a house in the UK is now £177,846. Prices rose by 0.6 per cent in February and are 9.4 per cent higher than they were a year ago. They remain three per cent below their 2007 peak, however.According to Nationwide, record low interest rates, improved credit availability and rising consumer confidence thanks to the healthy gains in employment recorded in recent months lie behind the price rises.Supply constraints are also a major factor - housing completions are still well below their pre-recession levels. Some 109,500 new homes were built in England in 2013 - 38 per cent below 2007 levels. This will accommodate only around half of the number of households expected to form in the years ahead.The Nationwide index analyses the role of cash buyers in the housing market, who are thought to have played an important role in market dynamics since the financial crisis.It says the proportion of cash transactions rose dramatically immediately following the crisis but has remained fairly constant since then. It attributes this trend to a sharp decline in mortgage transactions, however.Adverse labour market conditions and the tightening of credit conditions after 2008 limited the number of people able to buy with a mortgage, while fewer such constraints would have applied to cash purchasers.If mortgage activity picks up in as a result of improving credit availability and labour market conditions, Nationwide says these trends may moderate or reverse.A number of housing developers have posted strong half-year results recently, with Barratt the latest to do so. It has announced plans to increase recruitment on the back of its strong performance.Although housing supply remains well below demand, the government claims its policies are helping to stimulate the market and housebuilding is now at its highest rate for six years.
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