The annual rate of price growth also went upwards, meaning that prices are now 1.1% higher than a year ago, the fastest annual price rise since November 2011.
It is a sign that the housing market is gradually gaining momentum, according to Robert Gardner, Nationwide's chief economist, who pointed out the quarterly measure of house prices, which is a smoother measure of the underlying trend, has been in positive territory since October last year.
He also pointed out that it is not just prices that show that the market is improving as a number of measures of housing market activity have also started to move higher. For example, in the first four months of 2013 the number of property transactions was running at around 5% above the monthly average prevailing in 2012. The number of mortgage approvals for house purchase in the first quarter of 2013 was also around 4% above last year's monthly average.
‘A number of factors are likely to be contributing to the pick up in activity. There has been 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 Scheme. Indeed, mortgage rates have fallen back towards all time lows in recent months,’ said Gardner.
‘With the UK returning to growth in the first quarter of 2013, the improvement in wider economic conditions may also be playing a role in boosting sentiment. Widespread expectations that the economy will continue to recover gradually in the quarters ahead, that interest rates will remain low, and the ongoing impact of policy measures aimed at supporting the availability and lowering the cost of credit, all provide reasons for optimism that activity will continue to gain momentum in the quarters ahead,’ he explained.
However, he warned that progress is likely to be gradual and downside risks remain. ‘While there are signs that economic activity is picking up, there has been some softening in the labour market, with employment growth appearing to run out of steam in the first quarter of the year,’ said Gardner.
‘Moreover, while inflation has fallen back in recent months, pressure on household budgets remains intense, as wage growth has also decelerated. Indeed, in real terms, after taking account of inflation, average weekly wages have been falling for some time and are now back at the level prevailing in late 2003,’ he added.
