House prices continue to climb
House prices continued to climb in August, according to the latest Nationwide house price index.
The building society's monthly barometer found that across the UK property prices were up by 0.6% for the month, and are 3.5% higher than the same time last year.
The average UK home is now worth £170,514.
Mortgage approvals are also up, having reached their highest level since March 2008, and Samuel Tombs, UK economist at Capital Economics, says the figures may "fuel speculation that the housing market is in the early stages of another boom".
However he points out that the number of approvals is still 40% lower than the levels seen in the decade leading to the financial crisis. "The recent rise in wholesale interest rates may soon feed through to mortgage rates and so take some pace out of the recovery," he adds.
Meanwhile, research from Lloyds TSB suggests the improvement in the housing market is limited to first time buyers, and movement for "second-steppers" is flat, with many trapped in negative equity after buying their first home at the market's 2007 peak.
Lloyds TSB housing economist Nitesh Patel says this is "in sharp contrast to the number of first-time buyers growing by close to 20%" in the first six months of the year.
Figures from Lloyds also highlight the regional variation, with the north much more affordable for second-steppers. The bank calculates that the East and West Midlands are the most affordable areas, with London and the South East and South West the least.
This article was written for our sister website Money Observer
The circumstances in which a property is worth less than the outstanding mortgage debt secured on it. Although it traps householders in their properties, the Council of Mortgage Lenders (CML) says there is no causal link between negative equity and mortgage repayment problems. At the depth of the last housing market recession in 1993, the CML estimated 1.5 million UK households had negative equity but most homeowners sat tight, continued to pay their mortgages and eventually recovered their equity position.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.