Housing Leads the Economy
After the longest recession since the Great Depression (6 quarters of negative economic growth), the UK economy stuttered into action with a increase of 0.1% of GDP in the last quarter. Though technically this brings the UK economy out of recession, it may not feel like that for the majority of British consumers. Unemployment remains high with the prospect of rising further in 2010. Real incomes are likely to remain stagnant or even fall as the inflation rate (CPI 2.7%) exceeds weak wage growth.
Yet, despite the grim economic situation, the housing market continues to post house price increases. House prices increased by a seasonally adjusted 1.2 per cent during January, Nationwide figures showed today.
The latest increase, left the average UK home costing £163,481, a level last seen in August 2008. The annual house price inflation rate is now 8.6%.
The British Bankers association recently revealed that the number of mortgages increased in December. They suggested many were rushing to get a mortgage before the end of the stamp duty relief. However, the continued rise in house prices for January suggests there is a continuing imbalance between supply and demand.
