UK house prices jump by 10.9%, could speed up further- Nationwide

An estate agent board is displayed outside a property in London

LONDON (Reuters) -British house prices jumped by an annual 10.9%, the most in nearly seven years, and they look set to accelerate further as people seek new homes after the pandemic, mortgage lender Nationwide said.

Almost seven in 10 homeowners considering a move said they would be doing it even without the extension of a tax incentive by finance minister Rishi Sunak, Nationwide said, citing a survey it conducted in late April.

Shifting housing preferences were “continuing to drive activity, with people reassessing their needs in the wake of the pandemic,” Nationwide’s chief economist Robert Gardner said.

Tuesday’s figures are the latest to show the scale of the surge in house prices which hit a new record high at an average of 242,832 pounds ($345,355.67), according to Nationwide.

Bank of England Deputy Governor Dave Ramsden said in an interview published on Tuesday there was a “risk that demand gets ahead of supply and that will lead to a more generalised pick-up in inflationary pressure.”

“We are looking carefully at the housing market and a raft of real-term indicators,” he told the Guardian newspaper.

Nationwide said house prices were 1.8% higher than in April.

Economists polled by Reuters had expected prices to rise by 9.2% in annual terms and by 0.8% from April.

Nationwide said there was scope for annual house price growth to accelerate further in the coming months, given how weak the housing market was in early stages of the pandemic.

But if unemployment rises sharply later in 2021 – when Sunak’s jobs protection programme is due to expire – there was scope for activity to slow, perhaps sharply, it said.

Less timely but broader official data from the Office for National Statistics has shown that house prices in March jumped by just over 10%, the largest annual rise by that measure in nearly 14 years.

($1 = 0.7031 pounds)

(Writing by William Schomberg; Editing by Alistair Smout)