House prices up across the UK as economy rallies

House prices are 5.8% higher than they were this time last year, as the economy has gathered steam and government stimuli have contributed to increased market activity.

But the national averages for prices are still 7% below their 2007 peak, according to building society Nationwide.

Robert Gardiner, Nationwide’s chief economist, said the increases were part of a “resilient upward trend” in house prices, which have seen a 1% gain in October alone.

He said: “House price growth has accelerated as buyer demand has picked up more quickly than the supply of new homes. The risk is that if demand continues to strengthen while the supply of property remains constrained affordability could become stretched. Indeed, average wages have continued to decline in real terms even though employment growth has been fairly robust in recent years.”

Rapid rises in house prices have led economists to argue that Britain is in the early stages of a dangerous housing bubble, particularly in London, where house prices have climbed faster than anywhere else.