House prices rose by 8.4% in 2013, Nationwide says

UK house prices rose by 8.4% in 2013 as the economy started to gain momentum, according to the Nationwide Building Society.

The annual rise meant the average home was now valued at £175,826, it said.

The change was driven by annual house price growth of 14.9% in the final quarter compared with a year earlier in London, but prices rose in all regions.

However, it said the average UK property price remained 5% below the peak in prices reached in late 2007.

The Nationwide's figures are based on the lender's own mortgage data, so do not give a complete picture of the UK housing market.

This is the first house price survey to be published that offers an estimate for property price changes for the whole of 2013.

It suggested that UK house prices had accelerated at the end of the year, rising by 1.4% in December compared with November. Prices were up by 2.9% in the three months to the end of December compared with the previous three months.

The year-on-year comparison sees prices 8.4% higher than a relatively low point for prices in December 2012. This was the biggest rise since June 2010.

"The UK housing market followed the trajectory of the wider economy through 2013, gaining momentum as the year progressed," said Robert Gardner, Nationwide's chief economist.

"Part of the reason for the acceleration in house price growth is that the supply side of the market has not kept pace with the upturn in demand, even though buyer numbers remain subdued by historic standards."

Separate figures from the Bank of England show that buyer demand is picking up. The number of mortgages approved for house purchases stood at 70,758 in the UK in November. This was the highest figure since January 2008.

Total outstanding personal debt in the UK, including mortgages, now stands at £1.43 trillion, slightly higher, without taking inflation into account, than in 2007 just before the financial crisis.

David Tinsley, UK economist at BNP Paribas, said: "Overall the picture from the data remains consistent with a UK recovery that has been fairly household-led. For now there remains relatively little sign of a pick-up in broader corporate lending.

"We would look for that to change in 2014, but a risk remains that corporates will remain reluctant to borrow and invest."

Other surveys published in recent months have suggested that the housing market, and rising prices, have been driven by London.

The latest figures from the Office for National Statistics, based on mortgage completions, said that average property prices in London increased by 12% compared with 5.5% for the whole of the UK in the year to the end of October.

The same pattern is present in the Nationwide data. It suggested that average prices in London were now 14% higher than their previous peak in 2007. The typical London home now cost £345,186.

In the English regions, London saw the greatest acceleration by some distance, with the north of England registering the slowest annual price growth, up 1.9%.

Meanwhile, there was a 7% year-on-year rise in house prices in Northern Ireland, Scotland saw a 3.7% increase over the same period, and prices were up 6.1% in Wales.

Commentators are expecting UK house prices to continue to rise in 2014. Those asked by the BBC News website said they expected prices to go up by between 4% and 8% next year.