House prices edged up by an average 0.6 per cent across the UK last month according to the Nationwide, bringing a typical home’s cost to £196,807.
Prices have now risen by an average of 3.9 per cent over the past 12 months.
“Over the past five months annual price growth has remained in a fairly narrow range between 3.0 per cent and 4.0 per cent, broadly consistent with earnings growth over the longer term. While this bodes well for a sustainable increase in housing market activity, much will depend on whether building activity can keep pace with increasing demand” cautions Robert Gardner, Nationwide's chief economist.
Casting an eye to next year, he says that as a result of the popularity of fixed rate mortgages the proportion of outstanding mortgages on variable interest rates has declined steadily, from almost 70 per cent in mid-2012 to almost half now. “This should help to insulate many households from the impact of higher interest rates” he says.
“The housing market should be able to cope with higher interest rates in the year ahead, provided the increase is modest and the economy and the labour market remain in good shape.”
Earlier this week the Land Registry’s figures for England and Wales showed prices up 5.3 per cent over the past year - but with transactions around 10 per cent lower now than in autumn 2014.