House prices “pick up” in July

1st August 2006

House price growth picked up in July, and overall, the housing market remains “fairly buoyant”, according to new figures from the Nationwide.  The building society’s latest survey found that house prices rose by 0.8% last month – that’s up from 0.3% in June. 

The rises pushes the annual growth rate up to 5.9% and means the average UK property now costs £167,733.

On Monday, the Bank of England said that new mortgage approvals reached a five-month high in June. A total of 120,000 new mortgages were approved in June. That’s 3,000 more mortgages than were given the go-ahead in May.

With house prices continuing to rise, Nationwide says the problem of affordability “has not bitten as sharply as we’d expected”.  Group economist Fionnuala Earley says the figures suggest that buyers are still able to overcome traditional lending constraints; for example, via financial assistance from parents to help their children get onto the property ladder. Another factor could be looser constraints on mortgage lending.

Fionnuala Earley also said that rising prices had given the buy-to-let mortgage market a boost, with would-be first time buyers who are priced out of the market having to rent.