A shortfall in new housing and Government policies have helped to contribute to the sharp increase in property prices in 2013.
Average house prices increased by 8.4 per cent in 2013, increasing by 1.4 per cent in December alone, according to the Nationwide Building Societies house price index.
Nationwide chief economist Robert Gardner says house prices has been boosted by improvements in the labour market and a better economic outlook but that Government policies such as Help to Buy and the shortage of new housing stock is contributing.
Gardner says: “Policy measures also played an important supporting role by helping to keep mortgage rates close to all-time lows and improving the availability of credit, especially for those with smaller deposits.
“Part of the reason for the acceleration in house price growth is that the supply side of the market has not kept pace with the upturn in demand, even though buyer numbers remain subdued by historic standards.”
Yesterday, Prime Minister David Cameron said 6,000 people have so far taken part in the Help to Buy scheme borrowing almost £1bn.
Cameron said: “In less than 3 months, the scheme has already helped thousands of people. I want to see that continue in 2014 and for Help to Buy to help thousands more realise their dream of home ownership.”
However, shadow shadow housing minister Emma Reynolds said the Government should be doing more to encourage house building to
“Any help for first time buyers struggling to get on the property ladder is to be welcomed. But rising demand for housing must be matched with rising supply if this scheme is to bring the cost of housing within the reach of low and middle income earners.
“You can’t deal with the cost-of-living crisis without building more homes.”