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House prices see fastest quarter of growth since 1989

House prices rose by 3.3 per cent in June, rounding off the fastest quarter of growth since 1989, according to Nationwide Building Society.

The average home now costs £106,693, up from £102,693 in May. This is an increase of 19.8 per cent since June last year.

Based on these findings, Nationwide is revising up its forecast for house price growth for the year to 18 per cent from its prediction of 10 per cent in March.

But Nationwide says borrowers are not overstretching themselves as mortgage payments are only around 35 per cent of take-home pay for a first-time buyer compared with 50 per cent in 1982.

Annual price inflation in London slowed to 14.8 per cent in the second quarter of this year from 16 per cent in the first quarter but the average house price increased to £184,117 from £171,692.

Nationwide expects base rates to rise to around 5 per cent over the next six months.

Nationwide economist Alex Bannister says: “The housing market continues to hold up because of current economic conditions. We expect the pace of growth to moderate because of modestly higher mortgage rates later this year and a slowdown in employment and earnings&#39 growth.”

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