House prices up 3.5% in last 12 months

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House prices grew 3.5 per cent in the 12 months to July, according to Nationwide.

On a monthly basis, prices grew 0.4 per cent to £195,621.

Nationwide chief economist Robert Gardner says there are “tentative signs” that annual house price growth may be stabilising around the same pace as earnings growth, which has historically been around 4 per cent.

He adds: “This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand.

“The outlook on the demand side remains encouraging. Employment growth has remained relatively robust in recent quarters, and, after a prolonged period of subdued growth, wage growth is also edging up. With consumer confidence buoyant and mortgage rates still close to all-time lows, demand for housing is likely to firm up in the quarters ahead.

“It remains unclear whether activity on the supply side will catch up with demand.  The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term.”