The latest report by Nationwide has shown that the average price of property in the UK has now risen to £196,999, an increase of 4.5% year on year. This comes after a particularly strong market showing in December.
Property prices in the UK rose by 0.8% month on month in December, the strongest monthly increase since April. It was also a significant jump from the 1% rise seen in November.
Increased earnings growth, high and growing employment, low mortgage rates and rising consumer confidence have all led to sustained interest in properties from buyers.
“Further healthy gains in employment and rising wages are likely to bolster buyer sentiment, while borrowing costs are expected to rise only gradually,” said 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.”
Stronger house price growth is being witnessed in areas, such as Manchester, with higher rates of employment. To further highlight this point, Manchester created jobs at a faster rate than London in 2015, while also offering some of the highest yields in the UK.
Unsurprisingly, demand is still massively outstripping supply. The latest RICS survey found that new instructions fell for the 15th time in 16 months back in November. This shortage of supply means house price growth is expected to reach 6% in 2016.