House prices were 9.5% higher in March than March 2013, putting them at about 3% below the 2007 peak.
The figures come from the latest Nationwide house price index which also shows that house prices in London are up 18% on this time last year. At an average price of £362,699, homes in the capital now cost twice as much as the average price elsewhere in the UK.
Nationwide chief economist Robert Gardner said: There is little doubt that the recovery in the housing market is now firmly established, with activity levels picking up and house prices recording their fifteenth successive monthly increase in March.
There are some tentative signs of moderation, with the monthly pace of price growth slowing to 0.4% in March down from 0.7% in February and 0.8% in January. Nevertheless, viewed in annual terms, price growth is continuing to run at a robust pace, with the price of a typical home 9.5% higher than in March 2013.
Record low mortgage rates, improved availability of credit and the brighter economic outlook are all leading to increased demand for housing. However, the upturn in the supply side of the market continues to lag far behind, with the number of new homes being built in England still around 40% below pre-crisis levels (and this was already insufficient to keep up with the increase in the number of households being formed).
Rory Penn, partner of London estate agency VanHan, says: Nationwide's latest data will not completely comfort those worried about a house-price bubble as prices rose for the 15th consecutive month. However, there are signs that growth is moderating with a slower pace in March than the previous two months. This cooling will only be moderate, all things considered, given the continued strong demand from buyers combined with a structural lack of supply.
The number of transactions are still well below what they were at the 2007 peak of the market suggesting we are some way off a return to 'normal' market conditions, although prices are just 3% off that peak.
Rising consumer confidence among borrowers, increased lending and government schemes such as Help to Buy, are all contributing to the uplift in property prices. London again led the surge, with the average property costing twice as much as elsewhere in the UK. This is causing more Londoners to stay put rather than make the natural progression out to the countryside, fearful that they will ever afford to buy in London again, and further contributing to the shortage of stock for sale in the capital.
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