House prices are up again in August, by 0.6 per cent. That's in line with analyst predictions, and slightly lower than last month's 0.9 per cent growth (release).
Nationwide's figures are provided on a seasonally adjusted basis, while nominal average house prices have actually dropped slightly, down from £170,825 to £170,514. £311 isn't a discount we'll be writing home about, let alone buying one with.
As the economy continues to pick up, we can attribute some of the price rise to increased consumer demand. That's the good news. More worrying is the component that comes from government interventions – namely Funding for Lending and Help to Buy.
Such schemes aren't actually helping to increase the housing stock, which is constrained by tight planning rules, but merely inflating demand. That's seeing prices pushed up.
Robert Gardner, Nationwide's chief economist:
The risk is that if demand continues to run ahead of supply affordability may become stretched. While house prices are still elevated compared with in comes, affordability is being supported by the ultra low level of interest rates.
A typical mortgage payment for a first time buyer is currently equal to around 29% of disposable income, in line with the long term average.