A new report released by the UK’s largest building society, Nationwide, has shown that UK house prices increased that their fastest annual rate in May 2014.
Nationwide said that in May, year-on-year property prices were up from 10.9% to 11.1%, marking their highest annual rise in 7 years.
According to the report, the average UK house price now stands at £186,512 – the highest figure recorded since records began in 1991.
The previous peak was recorded in October 2007, just before the financial crisis erupted.
With property prices rising for 13 consecutive months, house prices in the UK have now reached an all-time high.
House prices are ‘starting to moderate’
Despite the rise in annual property prices, Nationwide has suggested that activity in the UK’s housing market may be ‘starting to moderate’, noting that prices in May increased by 0.7%, slightly less than the 1.2% rise recorded in April.
Based on mortgages approved by Nationwide during the month of May, the index provides and insight into the UK’s property market.
Nationwide cited a slowdown in lending due to new mortgage lending rules and criteria, which started in April, as one reason why property prices slowed in May.
“The underlying pace of activity should become more evident as we move through the summer months and the impact of MMR [mortgage market review] becomes clearer,” Nationwide’s chief economist, Robert Gardner, commentated.
“However, with mortgage rates close to all-time lows and labour market conditions continuing to improve, underlying demand for homes is likely to remain strong,” Gardner added.
The impact of the Help to Buy scheme
The Governments Help to Buy scheme has played an important role in helping first time buyers get onto the property ladder however Nationwide’s latest index reveals that in Q1 2014, only 9% of total mortgage completions were through the Help to Buy scheme.
Commentators are yet to decide whether lending restrictions have contributed to the month-on-month slowdown in property price increases.