The average price of a home continues to rise despite an increase in housebuilding, according to two surveys.
The Halifax house price index suggested prices were 3 per cent higher in the three months to the end of last month than in the previous quarter and up 9.7 per cent compared with the same period a year earlier. It said that the average price of a home was £209,495. On a monthly basis, house prices fell 1.4 per cent from January but Halifax said that monthly changes could be volatile and the “quarter-on-quarter trend is a more reliable indicator of the underlying trend”.
Nationwide building society said that the average price rose by 4.8 per cent in the year to February to £196,930. This was a bigger increase than the 4.4 per cent gain in the year to January, although house prices remained steady over the month with a 0.3 per cent gain.
Martin Ellis, an economist at Halifax, said: “Prices continue to rise at a robust pace driven by a significant imbalance between supply and demand. Whilst this position is likely to continue over the coming months, there are tentative signs that the supply situation may be beginning to improve.”
He said that more properties had gone up for sale over the past two months and that the level of housebuilding had increased “significantly”. The number of homes built by private housebuilders in England increased by 7 per cent between the third and fourth quarters of last year, while completions were 20 per cent higher than in 2014, the highest annual total since 2008.
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Nationwide said that mortgage approvals reached a two-year high in January, 74,581 compared with 71,000 in December.
It is thought that the rise in mortgage approvals is down to people rushing to secure a buy-to-let property or second home before the extra 3 per cent stamp duty on such purchases comes into effect next month, Nationwide said.
Samuel Tombs, chief UK economist at Pantheon, said the cooling in demand from buy-to-let investors after next month was unlikely to have much of an effect on soaring house prices.
“High levels of consumer confidence and record low mortgage rates will ensure approvals continue to rise over the coming months,” he said. “With the supply of homes coming on the market still extremely low, stronger demand will ensure house prices have considerable momentum this year.”
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The Nationwide figures showed that the rate of home ownership was stabilising after falling over the past 12 years. In England, home ownership between 2014 and 2015 was steady at 63.6 per cent after the government introduced measures such as Help to Buy. However, the total remains below the peak of 70.9 per cent reached in 2003.
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There has also been a “particularly marked decline” in home ownership among 25 to 34-year-olds, which is traditionally the segment containing the most first-time buyers.
The proportion of this age group who own their own home has dropped to 37 per cent from just below 60 per cent ten years ago.