"Measures aimed at keeping down the cost and improving the availability of credit are playing an important role. Mortgage rates have declined significantly from the already low levels prevailing last year."
- Robert Gardner, chief economist at Nationwide
The pace of Britain's annual house price growth was the fastest since July 2010 this month; however, the average price still lags 6% below the historic-high in late 2007. National house prices advanced 0.6% to an average of 174,566 pounds. On a yearly basis prices climbed 6.5%. The latest data from the Nationwide Building Society are fuelling debates over a developing housing bubble in the U.K. On the other hand, these figures mean that housing market has been strongly recovering in recent months. The number of mortgage approvals was 34% higher in September than in the same period a year earlier. A large part of this improvement could be attributed to a stabilization in the labour market and improved economic outlook, both bolstering sentiment among potential buyers.
A potential bubble is adding more pressure on the government and putting schemes like Help to Buy under the scrutiny. It seems that the Bank of England is moving in a direction it has not taken in more than six years. Two weeks after raising growth forecasts and hinting at a potential rate hike, the dilution of central bank's credit-boosting programme marks the first withdrawal of stimulus since the financial turmoil in 2007. This measure means that a period of super-low rates is finally coming to its logical conclusion.
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