First-Time Buyers Fuel UK House Prices in January: Nationwide
UK house prices in January continued to rise at a rapid pace, as first-time homebuyers fueled demand for residential real estate.
UK house prices rose 0.7 percent in January, data from the UK’s largest building society showed today. On an annualized basis, house prices rose 8.8 percent, the biggest annual rise since May 2010. A median estimate of economists polled by Thomson Reuters called for an 8.5 percent annual gain.
The increase in January pushed the average price of a UK home to £176,491. The rate of increase eased from December’s torrid pace, when home prices rose 1.4 percent, a four-year high.
“The housing market is continuing to gather momentum on the back of further solid gains in employment, record low mortgage rates and rising confidence,” said Robert Gardner of Nationwide. “The most decisive factor in achieving a sustained increase in first-time buyer numbers is likely to be the performance of the wider economy – especially the labour market with 280,000 new jobs created in the three months to November – the largest increase on record.”
Compared to year-ago levels, the number of first-time home buyers rose 32 percent in the third quarter of 2013, according to Nationwide.
Many economists and prospective homebuyers are concerned the housing market is growing out of control, and that the government’s Help to Buy program may result in a bubble. Rather than boost construction, the government scheme appears to be raising prices. The Help to Buy program was launched in mid-2012 to extend cheap finance to banks in order to help the housing sector rebound from recession. The remarkable pace of growth in the housing sector has helped the recovery efforts, but has also raised concern the housing market is overheating. In an effort to contain this risk, the government announced last year it would trim mortgage incentives and instead focus only on the small business sector.
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