UK house prices rose by 11.1 per cent annually last month, according to the latest figures from Nationwide.
That takes the cost of an average UK home to £186,512 - overtaking the previous peak reached in pre-crisis October 2007 for the first time. In April, the average cost was £183,577.
The building society’s house prices index showed a 0.7 per cent increase month-on-month. That does show a slight easing off from March to April, when prices rose 1.2 per cent.
Today's figures have just exceeded predictions, which were for a 10.9 per cent rise year-on-year, and a 0.6 per cent gain month-on-month.
That said, Nationwide’s three-month growth figure showed a fall from a 2.5 per cent increase seen in April to 2.3 per cent in May. The reading gives a less volatile indication of the market, and that rise is the lowest seen since August of last year.
Commenting on the numbers, Nationwide’s chief economist Robert Gardner said it's "too early" to pass comment on whether today's numbers show a cooling trend nationally.
The slowdown may partly be the result of the introduction of Mortgage Market Review (MMR) measures, which may take a few months to bed down. The underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer.
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.
Help to Buy
Nationwide also said this morning that first time buyers have been playing an “increasingly important” role in driving the housing recovery. But, the government’s flagship scheme Help to Buy has been playing a “supporting rather than a starring role”.
Help to Buy appears to be playing less of a role in areas which have seen the strongest recovery in house prices.
For example, London has recorded the fastest pace of house growth in recent quarters, with prices rising at an annual pace of 18% in Q1, almost twice the pace recorded in the UK as a whole.
He went on to say that Help to Buy announced for just four per cent of mortgage completions in London in the first quarter - the lowest proportion in a given region. The scheme, he explains, has had more of an impact in regions like the north of England, where house price growth has been “less marked”.