Annual house price growth accelerated to 12.6 per cent in February, up from 11.2 per cent in January and the strongest pace since June last year, according to the Nationwide.
Its latest index shows that house prices rose by 1.7 per cent month-on-month, after taking account of seasonal effects, the seventh consecutive monthly increase.
“The price of a typical home rose above £260,000 for the first time in February, an increase of £29,162 over the past 12 months. This is the largest ever annual increase in cash terms since the start of our monthly index in 1991. The price of a typical home is now £44,138 or 20 per cent higher than in February 2020 - the month before the pandemic struck the UK” explains Nationwide chief economist Robert Gardner.
“Housing market activity has remained robust in recent months, with mortgage approvals continuing to run above pre-pandemic levels at the start of the year. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The continued buoyancy of the housing market is a little surprising, given the mounting pressure on household budgets from rising inflation, which reached a 30-year high of 5.5 per cent in January, and since borrowing costs have started to move up from all-time lows in recent months.
“The strength is particularly noteworthy since the squeeze on household incomes has led to a significant weakening of consumer confidence. Indeed, consumers’ view of the general economic outlook and prospects for their own financial circumstances over the next 12 months have plunged towards levels prevailing at the start of the pandemic.”
But Gardner cautions that the economic outlook is particularly uncertain at present and it is likely that the housing market will slow in the quarters ahead with inflation expected to rise above seven per cent in the coming months.
He continues: “Indeed, there is scope for inflation to rise even further as events in Ukraine threaten to send global energy prices even higher. Assuming that labour market conditions remain strong, the Bank of England is also likely to raise interest rates, which will exert a further drag on the market if this feeds through to mortgage rates.
“Housing affordability has already become more stretched, in part because house price growth has been outstripping earnings growth by a wide margin since the pandemic struck. The price of a typical home is now equivalent to 6.7 times average earnings, up from 5.8 in 2019.”
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Houses I know sold for around £5000 (which would have bought 40,000 pints of beer) in the late 60's now sell for around £200,000 which would buy around 40,000 pints.
Where's the gain?
Landlords selling such a house would be liable for CGT of around 28% of £180,000 or so, i.e. about £50,000 or so, equivalent to about 10,000 pints!
Providing a home to renters for the last 50 years therefore means such a landlord has had the ability to buy 40,000 pints reduced to 30,000 pints.
Perhaps we should just emulate our tenants and buy the 40,000 pints of beer when we have the chance?
Let the "tenants' friends" in Shelter, Generation Rant etc. work out how to provide the much needed homes!
40,000 pints ? I get through that much in a month 😂
George
Stop paying your rent and you'll be able to get 40,200 pints every month.
Don't worry about eviction. Shelter will help if the booze doesn't kill you first! :-)
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