"Demand for homes has been supported by further modest gains in employment, as well as an improvement in the availability and a reduction in the cost of credit"
- Robert Gardner, Nationwide's chief economist
Home prices in the U.K. rose at their fastest annual pace in almost three years in June, adding to signs the economy is starting to gain the momentum, data from mortgage lender Nationwide showed Friday. House prices jumped 1.9% in June from the same month a year earlier, following May's 1.1% gain, posting the biggest annual increase since September 2010. Still, analysts expected a slightly stronger reading of 2.1%. On a monthly basis, prices were 0.3% higher this month compared with a 0.4% rise seen in May.
Earlier this month a report from Acadametrics and LSL Property Services unveiled that Property prices in England and Wales hit record high in May as government's initiative to ease credit pressure made mortgages available to larger number of people. The Funding for Lending Scheme, which was set up by the BoE to offer cheap finance to banks and building societies, has helped to lower banks' borrowing costs and reduce the costs of mortgages, leading to a significant development in the labour market. However, the impact on house-building was limited, and in March the Chancellor George Osborne announced additional measures to improve the situation.
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