Housing market gathers pace at fastest growth in three years

The annual increase of 1.9 per cent registered in June is a further sign that the market is gathering momentum, Nationwide reported.

On a month-on-month basis, house prices rose by 0.3 per cent in June, marking a slight slowdown compared with a 0.4 per cent rise recorded the previous month.

The building society said that government efforts to kick-start the market, as well as a lack of available homes to choose from, are helping to bolster house prices.

However, there are big regional divides, with prices in London now standing at a new all-time high at £318,214 on average – 5 per cent above their previous 2007 peak.

Nationwide’s chief economist, Robert Gardner, said London “has seen the greatest recovery in prices of any region”.

By contrast, prices across the UK are still around 9 per cent below their pre-crisis peak.

Regional divide

In England, prices are currently 5 per cent lower than those seen in 2007, while they are 13 per cent down in Wales, 12 per cent lower in Scotland and have plummeted by 53 per cent in Northern Ireland compared with their 2007 levels.

Ten out of 13 areas across the UK have seen house prices increase over the last year, while three – Scotland, Northern Ireland and Yorkshire and Humberside – have seen falls.

A string of recent studies have pointed to signs that the housing market is picking up, helped by government initiatives such as Funding for Lending, which gives lenders access to cheap finance and has prompted a sharp increase in mortgage availability as well as lenders slashing their rates.

The Council of Mortgage Lenders (CML), which represents banks and building societies, recently said that May was the best month it has seen for mortgage lending since 2008.