The annual house price growth was 4.5 per cent in February this year in the UK with the average price of a home reaching £205,846, according to Nationwide House Price Index for February. This demonstrates the stability of the housing market despite setbacks during 2016.
A year ago, the average price of a house in the UK was £187,964, and the growth trajectory held promise for investors in the housing sector. There is a marginal increase of 0.2 per cent month-on-month this year, and Nationwide has predicted a steady 2 per cent increase in prices of houses during 2017.
An important finding by Nationwide is the role of cash-buyers in spurring the growth of the house prices. “Cash buyers are a more important driver of housing market dynamics than they were a decade ago. The share of cash transactions increased significantly from around 20% in 2005/06 to around 35% in 2008 and has remained fairly constant since then,” Nationwide said.
The low interest rate environment at home and abroad has also continued to support the flow of cash into other asset classes, including the UK residential property.
The house prices in London are more than double the level prevailing in rest of the UK (£473,073 versus £205,937). This is one of the reasons for international investors to invest in London, as they tend to gain from the weaker sterling.
In our view a small rise in house prices of around 2% is more likely than a decline over the course of 2017, since low borrowing costs and the dearth of homes on the market will continue to support prices - Nationwide