Property prices in the UK rose by a monumental 8.4% in 2013, according to prominent Building Society Nationwide.
This means that the average price of a house in Britain is now estimated to be around £175,826, almost a £10,000 rise from the year before.
The severity of price jumps has been attributed to the steepness of price rises in the final quarter within London, where a massive 15% increase in property prices happened in the latter stages of 2013.
Despite these figures, Nationwide have cited that the average property still remains 5% cheaper than it was back in 2007, just before the global economic downturn took place.
Nevertheless, Nationwide’s remarks are based on an analysis of their own mortgage products, and as such do not provide a conclusive analytical picture of the property market in 2013.
They are however the first organisation to release an evaluation of the property market for the entirety of 2013, and release estimations of any yearly changes as a whole.
Nationwide’s study clearly indicates that the rate of property price rises picked up significantly in the latter months of 2013, with a 2.9% estimate given for the total increase between October and December.
Furthermore, a1.4% estimation was given for the increase between November and December, suggesting that the rate of property price increases has been swiftly rising in recent times.
The total estimated rise in property prices was disclosed as 8.4%, representing the highest jump since summer 2010.
“The UK housing market followed the trajectory of the wider economy through 2013, gaining momentum as the year progressed,” said Robert Gardner, chief economist at Nationwide.
“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”, Mr Gardner added.
The Bank of England also released data that indicated that demand for property is currently at its highest point since 2008, with over 70,000 mortgage approvals being made in November alone last year.
The huge rise in demand has caused many market commentators to raise concerns about a ‘housing bubble’ sometime in the near future, with many arguing that the rate of housebuilding desperately needs to be improved in order to avoid people being priced out of buying homes.
Britain’s currently total personal debt is currently estimated to be over £1.4 trillion, which is actually higher than it was back in 2007.
And it is feared that another year of drastic house price rises without wages being increased, debt levels being decreased and mortgage approvals being lowered will cause people to be left with properties that they will be unable to afford when interest rates rise.
David Tinsley, UK economist at BNP Paribas, said: “Overall the picture from the data remains consistent with a UK recovery that has been fairly household-led. For now there remains relatively little sign of a pick-up in broader corporate lending.
“We would look for that to change in 2014, but a risk remains that corporate will remain reluctant to borrow and invest.”
A consistent theme of many studies conducted about property prices in recent months has been the role of London in the severity of increases.
According to data from the Office for National Statistics, the average price rise for property in the capital in the year ending October 2013 was 12%, compared to a far lower 5.5% for the rest of the UK.
This notion has been reiterated by Nationwide, who argued that house prices in London are now actually higher than they were at their previous peak back in 2007. This means the average Londoner will have to gather £345,186 in order purchase a property in the capital.
Whilst further raises in house prices is not necessarily a negative occurrence moving forward into 2014, it can be argued that far more effort should be put into house building in the capital, where the already higher cost of living might begin to have more devastating consequences on the standard of living of its citizen’s if less unaddressed.