Property prices enjoyed a strong end to 2015, according to the latest survey from building society Nationwide.
The survey suggests that values increased by 0.8% in the last month, in comparison to November.
Happy New Year
2015 saw house prices increase by 4.5%, with the average property value in Britain now standing at £196,999. In a separate report, the Land Registry for England and Wales reports that house prices rose by 5.6% in the year to September.
Looking into 2016, the Nationwide said that with property price growth almost parallel to that of salaries, it expects a similar pace of growth in the next year.
The Halifax however has recorded an even greater rate, suggesting that property prices are rising twice as fast. In its most recent survey, the lender indicates that prices increased by 9% in the last year.
Capital Gains
London was found to be the strongest performing area for the 5th year in succession, with average house prices up by 12% annually. This said, Nationwide does not expect house prices in the capital to continue to grow at such a rate next year, with unaffordability already stifling many in the city.
At present, prices in the capital are 50% above their pre-financial crash peak in 2007. In comparison, values in Northern Ireland are 44% beneath their pre-crisis levels, despite increasing by 6.5% in the final quarter of 2015.
Property price growth up in December
In the UK as a whole, the Nationwide said that prices are up by 7% over the course of the year. Scotland was the only part of Britain to see a dip in average prices, with prices in the last quarter of the year down by 1.9% compared to the same period in 2014
‘Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually,’ observed Robert Gardner, Nationwide’s chief economist. ‘However, the main concern is that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability.’[1]
Concerns
Additionally, Mr Gardner predicted average house price growth of between 3% and 6% during 2016. He went on to say that he had concerns over regional variation in property values, meaning strong house price growth in some areas linked to higher rates of employment.
‘The gap in employment in London is particularly striking, with the number of people in employment up 14% compared to the pre-crisis period,’ he noted.[1]
Howard Archer, chief UK and European economist at IHS Global Insight also warned that average property values would be, ‘constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the probability that interest rates will start rising gradually during 2016.’[1]
[1] http://www.bbc.co.uk/news/business-35197410?ocid=socialflow_twitter&ns_mchannel=social&ns_campaign=bbcnews&ns_source=twitter