UK House Price Growth Accelerates As Expected In July

“There are tentative signs that annual house-price growth may be stabilizing close to the pace of earnings growth, which has historically been around 4 percent”, said Nationwide Chief Economist Robert Gardner.

Over the past year, property prices have risen 3.5pc, compared with the 3.3pc annual increase reported in the year to June.

The average UK house price is now £195,621, equivalent to a two-year rise of 14.5% as reported by Nationwide’s statistics.

These financial results come alongside a separate Nationwide data release which showed that UK house prices have returned to growth in July.

Finance minister George Osborne has said he wants to tackle a shortage of housing – one of the factors that have pushed prices to record highs and out of reach of many households – by making it easier to build new homes on land formerly used for industrial and commercial purposes.

Gardner argued: “The outlook on the demand side remains encouraging”.

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

The annual pace of growth is considerably down on previous year.

“It remains unclear whether activity on the supply side will catch up with demand”.

The average cost of a UK home, as indicated by the index, is now £195,621.

Nevertheless, he warned that housing market activity and house prices are likely to become constrained by more stretched house prices to earnings ratios, tighter checking of prospective mortgage borrowers by lenders and the likelihood that interest rates will soon start rising gradually.

Lower unemployment, wage growth and low mortgage rates means demand is more buoyant.

What’s happening to house prices?

We estimate that around 85% of transactions in London, the South West and South East have benefited from the changes, compared with around 55% in the North, Yorkshire and Humberside, and the North West of England.