Modest pick up in UK house prices, says Nationwide

This means the typical UK home is now worth £167,912

Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:

"House prices edged up by 0.4% in May, providing further support for the view that the housing market is gradually gaining momentum. The three month on three month measure of house prices, which is a smoother measure of the underlying trend, has been in positive territory since October last year.  The annual rate of house price growth also ticked up to 1.1% in May - the fastest pace since November 2011.

"It's not just prices - a number of measures of housing market activity have also started to move higher. In the first four months of 2013 the number of property transactions was running at around 5% above the monthly average prevailing in 2012.  The number of mortgage approvals for house purchase in the first quarter of 2013 was also around 4% above last year's monthly average.

"A number of factors are likely to be contributing to the pick up in activity.  There has been 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.  Indeed, mortgage rates have fallen back towards all time lows in recent months.

"With the UK returning to growth in the first quarter of 2013, the improvement in wider economic conditions may also be playing a role in boosting sentiment."

Ben Thompson, MD Legal & General Mortgage Club, comments on the latest Nationwide House Price Index:

“Overall the figures are painting an increasingly optimistic picture. However, the pace and extent of recovery is still split across the UK. Clearly London and the south-east is driving a great deal of momentum. Whilst fears of a bubble in the housing market persist they are largely unfounded as in other areas in the UK such as Nottingham sentiment is not universally positive thus making the picture patchier. As it stands house prices are only inflated in the capital and elsewhere in the country it could be argued that additional stimulus is still needed to get us fully on the road to recovery.”