The average house price in the UK edged up by 0.4% in July after experiencing a slight dip of 0.3% in June, Nationwide building society found in a study.
On a yearly basis, the house price jumped by 3.5% in an ongoing trend of annual growth which might slow down over the coming months, Nationwide chief economist Robert Gardner stated. He said: "After moderating over the past 12 months, there are tentative signs that annual house price growth may be stabilising close to the pace of earnings growth, which has historically been around 4%."
"This would bode well for a sustainable increase in housing market activity, though whether this will be maintained will depend on whether building activity can keep pace with increasing demand."
The average house price climbed to £195,621, as demand keeps soaring. Lobby groups have long called on the government to impose stricter regulations on landlords and agents to cap the house prices as demand in the UK is through the roof. Mortgage lending jumped by 29% to £20bn in June but first-time mortgage applications plummeted fell by 1.2%.
"The growing gap between supply and demand is worrying and clearly demonstrates that more needs to be done to plug this," Mark Hayward, managing director of the National Association of Estate Agents, said. "The [2015 general] election was full of promises to build more houses, but now those promises need to be put into bricks and mortar to respond to demand."
"The fact that demand is at an 11-year high without the housing stock to fuel it is bad news for the market," Hayward stated. First-time buyers are most affected by the soaring house prices as currently, typical "aspiring homemakers", the generation of 26 to 35-year-olds, are unlikely to afford a home to start their family and even rent prices are often too high for young professionals.
However, the growth is considered to be in line with the economic growth, although houses have become increasingly unaffordable for a large part of the population. Gardner argued: "The outlook on the demand side remains encouraging. Employment growth has remained relatively robust in recent quarters, and, after a prolonged period of subdued growth, wage growth is also edging up. With consumer confidence buoyant and mortgage rates still close to all-time lows, demand for housing is likely to firm up in the quarters ahead."
For the series on London's rents crisis by IBTimes UK, check out our Flipboard magazine on the issue that defines the city.