The price of an average home increased between April and May, rising by 0.3% from £164,134 to £166,022, the highest average since September 2011. House prices remain 0.7% down on the same period last year.
The price increase is due to demand outstripping supply, but the mutual said that low interest rates meant mortgage repayments took up just 31% of the average take-home pay, the lowest level in over a decade.
Once more, London was highlighted as the least affordable region, with average house prices at six time the level of earnings.
The north, north-west and Yorkshire and Humberside were listed as the most affordable, with average house prices between three and three-and-a-half times earnings.
Robert Gardner, chief economist at Nationwide, said: “Demand for homes remains subdued on the back of weak labour market conditions, but the lack of homes coming onto the market is providing support for prices.
This is in part a reflection of the low rate of building in recent years which has failed to keep pace with household formation.”
Ashley Alexander, managing director at estate agent reviewers MeetMyAgent.co.uk, warned that, despite an increase in May, sporting events this summer could push house prices down again.
“As we move into the quieter summer months, estate agents will be hoping the second half of the year doesn’t mirror the first; plenty of buyers, viewings galore but very few sold signs.
“The spike in activity around the stamp duty holiday coming to an end provided a much needed boost, but it won’t hide the fact that viewings aren’t translating into sales.
“Most agents will now expect to see a significant drop off in viewings over the next few months, especially with a summer crammed with major sporting events.
“The Euros kick off in early June, and with the Olympics just around the corner, people are going to be glued to their televisions rather than viewing properties.”
Perry Power, director at Power O’Shea estate agents, added: “While overall transaction levels remain low, there has been a rise in activity in recent months. The market is stabilising rather than collapsing. The May Nationwide data, showing a slight rise, confirms this.
“While demand overall is still weak, so is supply and this is acting as a glass floor under prices. However, the sharp rise in rents highlighted by the Nationwide is unsustainable.”
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