The latest figures from the Nationwide House Price Index show a sharp jump in house prices over the past 12 months.
According to the UK’s largest building society, house prices rose in July by 0.8%, with the London market again leading the way. Over the past 12 months, the Nationwide reported prices have risen by an average of 3.9% across the UK; the fastest rate of growth since August 2013.
Although the sharp 3.9% increase, is partly explained by a 2.6% decrease in the same month last year, the news is still encouraging for those people looking for an increase in house prices.
Average house price
The average home in the UK is now worth £170,825, the first time the index had broken through the £170,000 mark since the second quarter of 2008, when prices were falling dramatically in the wake of the financial crisis.
Housing experts believe much of the recent rise in property prices can be attributed to the Governments various initiatives, such as the Funding for Lending and the Help to Buy schemes, which have pushed interest rates down and made it easier for would-be homeowners to get onto the housing ladder.
Commenting on the figures, Robert Gardener, Chief Economist at the Nationwide, said: “House prices are currently around 12% higher than the lows seen in the midst of the financial crisis, though they are still around 10% below the all-time highs recorded in late 2007.”
“Signs of a modest improvement in wider economic conditions and further modest gains in employment are likely to be lifting buyer sentiment. An improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures such as the Funding for Lending and Help to Buy schemes, are also boosting the demand for homes.”
“At the same time, the supply side of the market remains fairly constrained. Building activity is still subdued – in Q1 housing completions in England were down 8% compared to the same period of 2012 and around 40% below the average number of quarterly completions in 2007. The fact that
rental growth has been consistently outstripping wage growth reinforces the notion that housing more generally remains in relative short supply.”
The Nationwide is the first of the major house price surveys to publish their data for July and it will be interesting to see whether data from the Halifax and Land Registry show similar increases.