House prices back on the up, says Nationwide

UK house prices rose slightly in May, as a squeeze in new properties on the market kept demand high, according to the Nationwide house price index.

The average price of a house rose 0.3% between April and May to £166,022 from £164,134, according to the Nationwide building society, which bases its figures on mortgage approvals made after surveys have been completed.

May's rise is the first since February, while over the 12 months since last May house prices are down 0.7%.

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The Nationwide's Chief Economist, Robert Gardner, makes clear that: "demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming onto the market is providing support for prices."

Gardner also notes how the lack of housing supply is also apparent in rising rents: "rental growth tends to track pay growth fairly closely over time. However, rental growth is now outpacing wage growth by a significant margin."

No one will be surprised to learn that in terms of affordability, London is still significantly more expensive than the rest of the country. The high property prices affect rents, with the average annual rent nearly 40% of the average salary in London, falling to nearer 20% in the north of England.

Rather conveniently, Nationwide has been collecting its data since 1952, when Queen Elizabeth ascended to the throne (although her coronation was in 1953). The lender makes the point that over the entirety of Elizabeth II's reign, house prices have risen 88 fold: 50 years ago the average price of a house was just £1,891.

BS