House prices grow at fastest rate in three years – Nationwide
House prices rose by 0.8% in July and were 3.9% higher than July 2012, making this the strongest rate of annual price growth since August 2010.
The typical home in the UK is now worth £170,825.
But the report showed that despite the recent boost, there is still a short supply of housing in the market.
Robert Gardner, chief economist at 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.”
Jeremy Duncombe, director at Legal & General Mortgage Club, said that although the rise in house price is ‘good news’, the momentum is mainly driven by the South-East of England.
He said: “Good news stories on the housing market are now hitting the news on a weekly basis. But these stories come with a word of warning. Whilst it is good to see so many first time buyers getting on the property ladder, the picture is still a patchy one, with London and the south-east driving the momentum.
“The support from the Government is clearly helping the market get going again, especially FLS to Help to Buy, and we are in an unprecedented period of low interest rates. It is therefore important to note that if this stimulus is removed too quickly, it may have a detrimental effect on the housing market. Tackling the deficit of new and affordable housing is a vital requirement to help the housing market start to stand on its own once again.”
This follows a report earlier this week from Halifax showing that first-time buyer numbers reached their highest level in the first half of this year since pre-financial-crash 2007.