End of recession property boost
The Nationwide Building Society has been quick off the mark in linking the end of the recession and rising house prices.
In its latest monthly figures on the UK property market, the building society connected the fact that the UK economy has emerged from recession and a house price spike in January.
It said the average cost of a home increased 1.2 per cent on the previous month to £163,481. Prices are now 8.6 per cent higher than a year earlier and down 12% from their peak in October 2007.
Martin Gahbauer, chief economist at Nationwide, said the rebound in the housing market - and particularly house prices - has gone some way beyond the recovery in the overall economy.
He added that house prices have now risen for nine months on Nationwide's measure but a lack of homes for sale has helped support the pickup in property prices during the past year.
Nationwide cautioned that further increases in house prices may be limited unless wages start rising again as the economy strengthens.
Gahbauer said with pay inflation near zero or even negative, every additional increase in house prices worsens housing affordability, particularly since interest rates are very unlikely to fall any further. This limits the upside potential for the current recovery in house prices.