Average UK home is now worth £170,825 as house prices continue to rise

UK house prices increased by 0.8% in July and were 3.9% higher than July 2012, according to Nationwide

"House prices are currently around 12 per cent higher than the lows seen in the midst of the financial crisis," said Robert Gardner, Nationwide's Chief Economist, "though they are still around 10 per cent below the all time highs recorded in late 2007.

"Signs of a modest improvement in wider economic conditions and further modest gains in employment are likely to be lifting buyer sentiment. An improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures such as the Funding for Lending and Help to Buy schemes, are also boosting the demand for homes."

Earlier this month, Halifax figures showed that 1 in 4 people expect house prices to increase by at least five per cent in the next 12 months.

Martin Ellis, housing economist at Halifax, said: “Sentiment regarding the outlook for house prices has improved markedly over the past three months, continuing the trend seen since late 2012. This increase in optimism is partly due to house prices being stronger than expected in the first half of the year. We continue to see a clear north-south divide with significantly higher proportions of people expecting prices to rise in the south than elsewhere in the UK.

“Nonetheless, the market still faces substantial headwinds with, for example, house prices remaining above the historical average in relation to earnings. Such factors are likely to prevent a sharp acceleration in house prices."