UK house prices have overtaken their 2007 peak, with the annual growth in home prices rising to to 11.8% in June from 11.1% a month earlier.
The June rise was the 14th straight month of price increases, according to the Nationwide mortgage lender's House Price Index. Month-on-month house prices climbed 1 per cent, compared to 0.7 per cent in May.
Nationwide said that the price of a typical property in London reached the £400,000 mark for the first time, with prices in the capital now around 30% above their 2007 highs and more than twice the level prevailing in the rest of the UK when London is excluded. In the UK as a whole, prices are less than 1% above their pre-crisis peak. Excluding London they are 0.4% below peak.
London prices rose by almost 26% in the second quarter compared to the first half of 2013.
Robert Gardner, Nationwide's chief economist, said on official moves last week to cool the market: “The Financial Policy Committee’s decisions to limit the proportion of lending at or above 4.5 times borrowers’ income to no more than 15% of new loans and to introduce a stress test to ensure that borrowers can afford a three percentage point increase in the benchmark Bank of England rate are unlikely to have a significant impact on housing transactions or the pace of price growth in the near term.
“Most major lenders are already using a stress rate in their affordability calculation that is broadly consistent with the new stress test. Similarly, the proportion of house purchase loans at or above 4.5 times borrowers’ income is currently some way below the 15% cap."
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