The ongoing increase in demand saw house prices rise by 1.1% in November alone, according to new figures from Halifax.
The UK’s biggest mortgage lender has announced that house prices rose by 7.7% in the year to November - the biggest leap in six years. Halifax says that supply is failing to keep up with increasing demand, which is driving up prices.
Halifax’s figures show a price rise of 1.1% in November and three month growth of 2.1%, putting the average house price at £174,910. This means that the average property price is now 4.77 times the income of an average full time male employee - up from 4.43 in November 2012.
The figures are based on mortgages approved by Halifax during the month, which means that, as they were one of the first lenders to join the Help to Buy scheme, the figures will include Help to Buy mortgages. The annual figures are based on a comparison of 3 months of figures on the same period of the previous year. A straight year on year comparison puts the annual growth rate at 8.4%.
Martin Ellis, Halifax’s housing economist, said:
“Stronger demand, combined with an insufficient increase in housing supply, has resulted in increases in house prices accompanying higher activity this year.
“Low interest rates, improvements in consumer confidence and official schemes, such as Funding for Lending and Help to Buy, all appear to have boosted demand.”
The Bank of England has been under pressure recently to show that it is working to prevent the creation of an artificial housing bubble. In order to do this, the Bank has announced that it will refocus the Funding for Lending Scheme towards business lending rather than mortgage lending.
Matthew Pointon, property economist at Capital Economics, said:
“There are reasons not to panic quite yet. For one, there is no evidence that banks are about to rapidly loosen their lending standards and kick-off a new credit boom,
“If the spring brings a tide of sellers who have so far been delaying putting their home on the market, that will help take the heat out of price rises. But if those sellers do not return early next year, the risk of an unsustainable rise in house prices will grow.”