Nationwide sees house price growth accelerate

Nationwide said house prices rose by 0.4 percent on the month in July – in line with economists’ forecasts and compared with a fall of 0.2 percent the previous month.

The average cost of a UK home, according to the index, is now £195,621.

Robert Gardner, Nationwide’s chief economist, said: “The outlook on the demand side remains encouraging”.

Howard Archer, at IHS, said: ‘Latest data and survey evidence largely indicate that housing market activity is on the up, and we suspect it will continue to improve amid generally supportive fundamentals, notably including strengthening earnings growth, higher employment, elevated consumer confidence and very low mortgage interest rates.

However, the building society says this depends on building activity keeping pace with increasing demand.

While Nationwide said the number of new homes being built has started to pick up, it’s coming from a low level and more are needed to ensure a “sustainable recovery” in the longer term.

Mr Gardner said: “The slab structure used to result in significant distortions with a clustering of transactions at the tax thresholds”.

The annual pace of price growth is now around one third of what it was a year ago.

Other measures of house prices have suggested that Britain’s housing market is picking up again after slowing in 2014 when new rules on mortgage lending were introduced.

“On balance (considering the net effect of those paying more and those paying less), we estimate that the changes have resulted in around GBP275m less tax being paid than would have been the case under the old stamp duty regime”, Gardner concluded. Approximately two percent of buyers paid more tax, two-thirds of whom purchased property in London.

Nationwide have also been looking into what impact the new stamp duty regulations have been having on the market.

LSL Property Services announced on Tuesday an 80pc slump in pre-tax profits to £6.2m in the six months to June 30.

By contrast, the lettings and surveying divisions performed well.

He said: “Key economic growth indicators, the political landscape and consumer confidence all remain positive although the market is seeing lower levels of estate agency instructions and availability of stock outside of London and the South East”.