UK house prices increased by 0.8% in July and were 3.9% higher than July 2012, the strongest rate of annual price growth since August 2010, according to the latest index from the Nationwide Building Society.
The typical UK home is now worth £170,825 and house prices are now currently around 12% higher than the lows seen in the middle of the financial crisis. But they are still around 10% below the all time highs recorded in late 2007.
Robert Gardner, Nationwide’s chief economist, also pointed out that annual rate of house price growth for July was boosted by the low base for comparison, as prices declined by 2.6% in July 2012.
‘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,’ he explained.
‘At the same time, the supply side of the market remains fairly constrained. Building activity is still subdued. In the first quarter of the year 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,’ he pointed out.
‘The fact that rental growth has been consistently outstripping wage growth reinforces the notion that housing more generally remains in relative short supply,’ he added.
But generally the fact that the recovery has extended to the housing market has been welcomed. ‘The Help to Buy scheme has boosted market confidence and, despite all the chatter around a so called property bubble on the horizon, this renewed lending is responsible lending in a climate where home owners are seeing their equity increasing,’ said Paul Smith, chief executive officer of haart estate agents.
‘However, for each property coming onto the market, an average of 19 people are chasing it so the laws of supply and demand are fully in play and we see no sign of this abating,’ he added.