UK house prices 'pick up' in July

The building society's latest housing survey found that prices rose by 0.8% last month, up from 0.3% in June, pushing the annual growth rate to 5.9%.

The rise means the average UK property now costs £167,733.

The three-monthly trend showed that prices rose by 1.2% in the three months to July compared with the previous three months.

'Looser constraints'

With house prices continuing to rise, Nationwide group economist Fionnuala Earley said that the problem of affordability "had not bitten as sharply as we had expected".

"While affordability may not be biting so hard now, like a guard dog's bark, it cannot be ignored indefinitely"
Fionnuala Earley, Nationwide group economist

This suggested that "buyers are still able to overcome traditional lending constraints", she said.

This may be as a result of looser constraints on mortgage lending, or financial assistance from parents to help their children buy properties.

Rising prices had also given the buy-to-let market a boost, Ms Earley said, with would-be first-time buyers who are priced out of the market being forced to rent.

"Additional demand for homes has increased tenant demand and landlords' incentives to invest," she said.

But Ms Earley warned: "While affordability may not be biting so hard now, like a guard dog's bark, it cannot be ignored indefinitely."

Mortgage approvals

On Monday the Bank of England (BoE) said that new mortgage approvals reached a five-month high in June.

In total, 120,000 new mortgages were approved in June, up 3,000 on May's figure.

Analysts suggested that this underlined the strength of the UK mortgage market.

So far this year, UK house price growth has outstripped most forecasts.

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