According to Nationwide’s monthly House Price Index, the average UK home gained 0.3% this month to stand at £168,941. The growth follows a 0.4% gain in April.
Property prices are now 1.9% higher than they were in June 2012 – the biggest annual increase recorded since September 2010.
Overall, 10 out of the UK’s 13 regions recorded positive growth. East Anglia was the strongest performing region, with annual price growth of 3.6%, whilst Yorkshire & Humberside was the weakest English region, with prices down 0.8% over the year.
Prices also fell annually in Scotland (-1.2%) and Northern Ireland (-2.1%).
Annual house price growth softened in Wales from 2.5% to 1.2%, but remained in positive territory.
Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “A number of factors are likely to be contributing to the recent acceleration. 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, partly as a result of policy measures, such as the Funding for Lending Scheme. Signs of a modest improvement in wider economic conditions may also be playing a role in boosting buyer sentiment.
“At the same time, there are few signs that the supply of housing is improving significantly. Indeed, construction data point to a further decline in building activity in recent quarters from already depressed levels. For example, in Q1 2013 housing completions in England were down 8% compared to the same period of 2012 and around 40% below the average number of quarterly completions in 2007”.
On an annual basis, London continued to lead the way, with average values in the capital up 5.2% to stand at £318,214.
Jonathan Hopper, managing director at property search consultants, Garrington, said: “For prices in the capital to be 5% above their 2007 peak is nothing short of incredible.
“The London property market is an extraordinary microcosm. It has effectively broken free of the rest of the UK and is operating in its own stratosphere.
“While its jobs market has been resilient, the primary driver of the growth has been strong overseas demand.
“The global economy remains turbulent and London is seen as a safe haven by the internationally mobile.
“The impact of the Olympic legacy has also seen prices shoot up in boroughs connected with the Games.
“The property market is, of course, far healthier in some areas than it is in others. London and the South East are very strong while many areas of the country are still showing flat, negligible or even negative growth.”