It’s not an April Fool - capital appreciation of homes really is running at 14.3 per cent a year according to the Nationwide.
Prices rose by 1.1 per cent month-on-month, after taking account of seasonal effects - the eighth consecutive monthly increase.
Nationwide chief economist Robert Gardner says: “The price of a typical UK home climbed to a new record high of £265,312, with prices increasing by over £33,000 in the past year. Prices are now 21 per cent higher than before the pandemic struck in early 2020.
“The number of mortgages approved for house purchase remained high in February at around 71,000, nearly 10 per cent above pre-pandemic levels. A combination of robust demand and limited stock of homes on the market has kept upward pressure on prices.
“The continued buoyancy of housing demand may in part be explained by strong labour market conditions. The unemployment rate has continued to trend down in recent months (to 3.9 per cent in the three months to January) from already low levels. Wage growth has accelerated, though it is running below inflation.”
Gardner continues: “The significant savings accrued during lockdowns is also likely to have helped prospective homebuyers raise a deposit.
“We estimate that households accrued an extra £190 billion of deposits over and above the pre-pandemic trend since early 2020, due to the impact of Covid on spending patterns.
“This is equivalent to around £6,500 per household, although it is important to note that these savings were not evenly spread, with older, wealthier households accruing more of the increase.
“Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high. Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”
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