British house prices booming as year begins with 8.8% jump

The British property boom has continued into 2014 as the market gained momentum in January, with year-on-year prices surging by 8.8%.

Prices rose by 0.7% in January to reach an average of £176,491 in the UK, making it the 13th consecutive month Nationwide has reported growing property prices.

The annual increase of 8.8% is the largest since May 2010, but house prices are still 4% below their 2007 all-time high.

The strong start to the year may be good news for homeowners, but will dismay those potential buyers who were hoping for slower growth over the winter, and could boost calls for the Bank of England to act to prevent the formation of a housing bubble.

Robert Gardner, Nationwide’s chief economist, said: “The housing market is continuing to gather momentum on the back of further solid gains in employment, record low mortgage rates and rising confidence.”

“The pick-up in activity appears to be fairly broad-based, and it is encouraging that first-time buyers are a key driving factor behind the upturn.”