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House price inflation rises to 10.5 per cent says Nationwide

Building society says annual rate of UK house price inflation hits double figures for the first time

In April alone prices rose by 1 per cent, sending the cost of the average home to £167,802. "Over the lifetime of the last Parliament (May 2005 to April 2010), house prices have risen by 6.7 per cent. This compares to a 13.5 per cent increase in the consumer price index, the official target measure of inflation," said Martin Gahbauer, Nationwide's Chief Economist.

"Rather than a surge in cash buyers, the more important driver of rising house prices has been the low level of stock for sale, as many homeowners and buy-to-let landlords continue to wait for prices to recover to peak 2007 levels before deciding to sell up or move," he added. Post credit-crunch, first-time buyers have to put down larger deposits to secure a mortgage.

However, Nationwide said that as the year progressed there would be a flattening of prices. "Nonetheless, there has recently been evidence of a slight shift in the supply-demand balance. While the recovery in new buyer enquiries at estate agent offices appears to have petered out, the last few months have seen an increase in the level of new instructions from sellers. All else equal, this should lead to a gradual flattening out of the recent upward price momentum, and this is indeed what the 3 month trend in April's figures shows," Mr Gahbauer said.