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Nationwide says housing market &#39not overheated&#39 despite record price rises

House prices are rising at a record rate, with the average home now costing £100,473 – £14,000 more than last year – according to the latest house price index from Nationwide.

House prices went up by 3.4 per cent in April, says Nationwide. The annual increase is 16.5 per cent.

However, the building society says the market is not becoming overheated and compares favourably with the 1980s. It says a typical property is now worth five-and-a-half years&#39 worth of a buyer&#39s take-home pay compared with seven years&#39 worth at the end of the 1980s.

Since 1996, the price of an average property has increased by almost £50,000 or 11 per cent a year. Mortgage interest rates are still very low, meaning repayments account for less than 25 per cent of take-home pay compared with 58 per cent at the end of the 1980s.

Group economist Alex Bannister says: “With mortgage rates set to remain relatively low in the next few years, it is likely house prices could be even higher without major concerns. We expect a steady pattern of economic growth for this year accompanied by low inflation and interest rates nudging back up towards 5 per cent.”

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