House prices surged by 6.5% over past year, Nationwide reports

Latest monthly increase of 0.6 per cent took average UK house values to £174,566

House prices are now rising at 6.5 per cent a year, marking the fastest annual increase seen in three years, according to figures by Nationwide.

The building society, which is the UK’s second largest mortgage lender, said that the average price of a house or flat in the UK is now £174, 566. Prices have been rising every month for the last year and are up from 5.8 per cent a month ago.

The annual increase is the strongest since July 2010, but Nationwide said prices are still around six per cent below an all-time high recorded in late 2007.

However, on a monthly basis, prices increased slightly slower than in October, when figures rose by one per cent in one month.

Yesterday, the Bank of England took the first step in putting the brakes on the surging property market with its decision to stop Funding for Lending (FLS) for household mortgages.

Governor Mark Carney said the FLS incentive was no longer needed amid rising house prices and, from January, it would instead be focused on business lending.

Under FLS, banks and building societies have been able to borrow money cheaply on the condition that they lend it out to individuals and businesses, and experts said yesterday that the move could spell the “beginning of the end” for ultra-cheap mortgage deals.

Fears of a looming property bubble have been growing in recent months amid a series of reports suggesting that demand in the housing market far outstrips the growth in the supply of homes.

Land Registry figures released yesterday showed that house prices in London were up by 8.7 per cent year-on-year in October. However, prices in the North East have dropped by 3.1 per cent in the same period.

Robert Gardner, Nationwide’s chief economist, said that that a large part of the uplift in the housing market is down to improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers.

He also highlighted the impact that low mortgage rates have had on borrowers' costs.

Mr Gardner said: "Mortgage rates have declined significantly from the already low levels prevailing last year.

"For example, Bank of England data indicates that the interest rate on two-year fixed-rate mortgages for those with a 10 per cent deposit has fallen from 5.6 per cent to 4.4 per cent over the past 12 months.

"For a buyer purchasing the typical UK home over 25 years, this equates to a reduction in monthly payments of around £110 (£1,320 per year) at the current average house price."

Additional reporting by PA

News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
PROMOTED VIDEO
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
Sport
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
i100
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?