The average cost of a UK house has hit a record £186,512 – the highest level achieved since October 2007, before the financial crisis took hold.
According to Nationwide’s housing price index, UK house prices surged by 11.1% annually last month.
The index showed a 0.7% rise month-on-month compared to a 1.2% increase in March to April.
However, three-month growth figures for UK house prices have seen a drop from 2.5% in April to 2.3% in May.
Nationwide’s chief economist Robert Gardner said: “The slowdown may partly be the result of the introduction of Mortgage Market Review (MMR) measures, which may take a few months to bed down. The underlying pace of activity should become more evident as we move through the summer months and the impact of MMR becomes clearer.”
Gardner also pointed out that first-time buyers accounted for 48% of purchases in March, beating previous records of 38%.
Nationwide’s analysis also showed that Help to Buy didn’t contribute to the increase in house prices. In the first quarter of the year, Help to Buy mortgages made up for only 9% of total mortgage completions. Also, only 4% of mortgages completed in London in the first part of the year were through Help to Buy.
“Low mortgage rates and buyer confidence on the back of improving labour market conditions and the brighter economic outlook are probably playing a much greater role in stimulating buyer demand,” said Gardner.