The typical UK home is now worth £170,825 which is 3.9% higher than the average price in July last year - meaning July saw the strongest rate of annual price growth since three years ago (August 2010).
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“UK house prices rose by a robust 0.8% in July, providing further evidence of an upturn in the housing market. The annual rate of house price growth increased to 3.9% in July, though this figure was boosted by the low base for comparison, as prices declined by 2.6% in July 2012.
“House prices are currently around 12% higher than the lows seen in the midst of the financial crisis, though they are still around 10% below the all time highs recorded in late 2007. 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.
“At the same time, the supply side of the market remains fairly constrained. Building activity is still subdued – in Q1 housing completions in England were down 8% compared to the same period of 2012 and around 40% below the average number of quarterly completions in 2007. The fact that rental growth has been consistently outstripping wage growth reinforces the notion that housing more generally remains in relative short supply.”
Jonathan Hopper, managing director, property search consultants, Garrington, comments:
"We've seen three consecutive months of house price growth, and July was the biggest increase in any single month in 2013. The property market's recovery is really picking up pace. Growth of less than 1% is far from the heady days of double digit monthly price rises. But this feels like a healthy recovery of a property market that was genuinely in the doldrums. London continues to operate in a stratosphere of its own, but it no longer feels like the capital is the property market's sole prop."
"We should remember that it is still early days and the market, in many areas, is still way off its peak. But it is definitely in a much healthier state than it was this time last year.
"September will be crucial. The summer months have seen a decent level of buyer activity and it's encouraging that first time buyers, with the help of government backed schemes, have slowly returned to the market. But how the market fares in September post holiday season, when historically buying activity picks up, will be crucial if this positive growth is to continue."
Jonathan Samuels, CEO, Dragonfly Property Finance, said:
"Things are starting to come together for the property market and its momentum is increasing. The quarter on quarter change in house prices reflects this growing momentum. The economy is strengthening, people are getting more confident and mortgages are not just cheaper but much more accessible. The average figure, we should remember, can be misleading, as there are still many areas around the country where the property market is far from healthy, especially in the North.
"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's their time once again but buyers, while more active, are still cautious and are unprepared to pay over the odds."
Jeremy Duncombe, Director, Legal & General Mortgage Club, comments:
“Good news stories on the housing market are now hitting the news on a weekly basis. But these stories come with a word of warning. Whilst it is good to see so many first time buyers getting on the property ladder, the picture is still a patchy one, with London and the south-east driving the momentum.
“The support from the Government is clearly helping the market get going again, especially FLS to Help to Buy, and we are in an unprecedented period of low interest rates. It is therefore important to note that if this stimulus is removed too quickly, it may have a detrimental effect on the housing market. Tackling the deficit of new and affordable housing is a vital requirement to help the housing market start to stand on its own once again.”
