Another small but steady rise in house prices

UK house prices continued to gain momentum, increasing by 0.8% in July, according to the latest data from Nationwide.

They are now 3.9% higher than July 2012, with the typical UK home worth £170,825.

Nationwide Chief Economist Robert Gardner said: “The annual rate of house price growth increased to 3.9% in July, though this figure was boosted by the low base for comparison, as prices declined by 2.6% in July 2012.

“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.”

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