The data from the Nationwide Building Society, one of the UK’s biggest lenders, also shows that prices are now just 6% below the peak of the market in 2007.
This takes the annual rate of increase to 6.5%, the strongest pace since July 2010 as activity in the housing market has picked up strongly in the second half of 2013.
Robert Gardner, Nationwide's chief economist, pointed out that the number of mortgage approvals for house purchase reached 66,735 in September, 34% higher than the same period of 2012.
‘A large part of the improvement can be attributed to further improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers,’ he explained.
‘Policy measures aimed at keeping down the cost and improving the availability of credit are also playing an important role. Indeed, mortgage rates have declined significantly from the already low levels prevailing last year,’ he said.
‘For example, Bank of England data indicates that the interest rate on two year fixed rate mortgages for those with a 10% deposit has fallen from 5.6% to 4.4% 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 or £1,320 per year at the current average house price,’ he added.
According to Ian McGrail, managing director of FirstMortgage, the latest house price figures from Nationwide indicate that the economy really is on the way out of the recession.
‘This rise is representative of the economy picking up steadily, and correcting itself. Whilst many are panicking about a property bubble, this growth shows we are returning to normal, as schemes such as Help To Buy are beginning to influence not only purchasing activity but are also having a positive influence on prices,’ he said.
