First-time buyers drive 8.8% rise in house prices
The average price of as home increased by 8.8% in the year to January 2014, according to Nationwide's house price index.
It says prices rose by 0.7% in January alone - the 13th month in a row prices have increased – taking the average price of a home in the UK to £176,491.
The building society attributed the rise to the employment rate rising and continued low interest rates, while it said first-time buyers are also returning to the market.
Robert Gardner, Nationwide's chief economist, said: "The pickup in activity appears to be fairly broad-based, and it is encouraging that first time buyers are a key driving factor behind the upturn.
"First time buyers are the lifeblood of the housing market. As well as accounting for a significant proportion of housing transactions (historically around 40% of transactions involving a mortgage), they also play an important role in the wider market, for example in helping to complete chains, enabling those that already own a property to move."
"For this reason, it is particularly encouraging that first time buyer numbers have been rising strongly in recent quarters. Indeed, at 73,700 in Q3 2013, they were up 32% compared with the same period in 2012 and accounted for around 44% of activity - close to an all-time high as a share of lending activity."
Driving the market
Nicholas Ayre, managing director of homebuying agency Home Fusion, added: "We have seen first time buyers driving the market forwards and upwards. This is critical to the wellbeing of the housing market, as it unlocks mobility, enabling subsequent buyers to move up the housing ladder and is not something we have seen for a while."
Ayre also pointed out that the current mortgage market is "sensible", with 20% deposits for first-time buyers and more mortgages being taken on a repayment basis rather than interest-only. "Whilst this is no doubt a reflection of the strict supply of interest-only mortgages, it also means that first time buyers are possibly getting help from the Bank of Mum and Dad and we are seeing some of the effects of [the government's] Help to Buy [scheme] filtering though into the numbers."
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.