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House prices rise 3.9% in a year, says Nationwide

House prices rise 3.9% in a year, says Nationwide

UK house prices recorded their biggest year-on-year increase for nearly three years in July, according to the Nationwide building society.

Annual price growth hit 3.9%, the lender said, which meant the average home cost £170,825.

Average prices rose by 0.8% compared with June, with the building society describing the increase as “robust”.

However, it said that housing remained in relatively short supply, as rental costs were still rising.

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 Buyer Confidence

Property prices a year ago were falling, according to the Nationwide’s calculations, so this was part of the explanation behind the large annual change.

However, the lender’s chief economist, Robert Gardner, said that average prices were 12% higher than the lows seen during the financial crisis.

The latest figures do not suggest a return to a housing boom – prices remain 10% lower than the record highs of 2007.

Instead, Mr Gardner pointed to the slight pick-up in the economy in general as well as “modest” rises in employment levels as reasons behind buyers becoming more confident.

Government schemes, such as Funding for Lending and Help to Buy, have also made it a little easier for potential buyers to secure a mortgage, he said.

The former is aimed at getting cheaper funds to lenders which they can pass on to borrowers, while the latter is designed to assist first-time buyers in purchasing a newly-built home.

“It was only going to be a matter of time before house prices began to take off, with all the stimulus measures being thrown at the market,” said Rob Wood, chief economist at banking group Berenberg.

However, Jonathan Samuels, chief executive of Dragonfly Property Finance, said that the average price change did not necessarily reflect the different pace of housing market activity in different parts of the UK.

“There are still many areas around the country where the property market is far from healthy, especially in the North of England,” he said.

“The recovery is promising but it is still, as yet, a patchwork recovery. The worry is that asking prices are getting ahead of economic reality.

“Sellers sense it is their time once again but buyers, while more active, are still cautious and are unprepared to pay over the odds.”