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House prices nudge upwards 0.3% 28 June 2013

UK house prices have risen 0.3% in June according to latest figures from Nationwide, 1.9% higher than June 2012.

The increase means that the average UK house now costs £168,941.

The Funding for Lending Scheme (FLS) was one of the contributing factors to the increase, the fastest rise in house prices since September 2010.

Robert Gardner, chief economist at Nationwide, said a “number of factors are likely to be contributing” to recent acceleration in prices.

He explained: “Demand for homes has been supported by modest gain in employment, as well as an improvement in the availability and a reduction in the cost of credit, partly as a result of policy measures, such as the Funding for Lending Scheme.”

The FLS was launched in April 2012 to offer subsidised credit to banks and building societies in order to boost lending to UK households and non-financial companies.

The scheme was originally due to expire in January 2014, but was extended until January 2015 in April, despite an overall drop in the levels of net lending of £300m in Q1 2013.

Although there are “signs of a modest improvement in wider economic conditions”, Gardner says there is still reason for concern.

He explained: “There are few signs that the supply of housing is improving significantly. Construction data points to a further decline in building activity in recent quarters from already depressed levels.

“For example, in Q1 2013 housing completions in England were down 8% compared to the same period of 2012 and around 40% below the average number of quarterly completions in 2007.”



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