"Mounting signs that the economic recovery is becoming firmly established, together with a predicted decline in unemployment, should further boost consumer confidence over the coming months"
- Martin Ellis, Halifax housing economist
Is Britain at risk of a housing bubble? Perhaps, but the latest data suggests fears are exaggerated, as house price fell between November and December, posting the first monthly decline since January 2013. The price movement eased last month, as the house price index plunged 0.6%, causing the annual growth to slow to 7.5% from November's six year-high of 7.7%. The data was not expected by analysts, as average forecast stood at 0.6% increase. Even though prices eased slightly towards the end of the last year, the outlook still suggest property prices will keep the pace throughout the next 12 months.
The same report showed values inched higher 1.9% in the final quarter, leading to a 5.7% yearly gain. At the same time, the central bank said mortgage availability improved significantly over the last three months and are posed to increase further. The number of mortgage approvals currently hovers around its six-year high amid economic amelioration and government incentives aimed at boosting credit affordability.
With eleven consecutive monthly gains in house prices, there is a real risk of a housing bubble developing in 2014, especially if gains are recorded in all regions of the U.K. This opinions contrasts with the one expressed by George Osborne, who does not see any sign of another bubble.
© Dukascopy Bank SA