The recent growth in UK property prices is showing no signs of slowing, according to the latest data released by the Nationwide Building Society.
The newly released figures show that house prices rose by 0.8 per cent in July and are now 3.9 per cent higher than they were at the same time last year.
This means the typical UK home is now worth £170,825 – a five-year high according to Nationwide figures – and is growing in price by well over £1,000 a month.
A number of government initiatives introduced in the past 12 months in an attempt to boost the UK’s once flagging housing market – such as the Funding for Lending Scheme (FLS), and the NewBuy and Help to Buy schemes – have been cited as the main drivers of the property market’s return to strength.
“House prices are currently around 12 per cent higher than the lows seen in the midst of the financial crisis, though they are still around 10 per cent below the all time highs recorded in late 2007,” said Robert Gardner, Nationwide’s chief economist.
“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,” he added.
Nationwide also point out that a lack of supply of new homes is also a major contributing to the rising prices.
There are some economists, however, who fear the UK is entering a new property bubble that could price a new generation out of the property market.
“House prices are already overvalued, and with many first-time buyers already locked out of the market, it is unlikely they are happy at the prospect of having to take on even more debt to realise their homeownership aspirations,” said Matthew Pointon, an economist at Capital Economics.