UK house prices have increased by 3.9% from July 2012, their highest annual rate since August 2010.
According to the latest Nationwide House Price Index the average UK home is now worth £170,825.
Robert Gardner, Nationwide’s Chief Economist, said: “UK house prices rose by a robust 0.8% in July, providing further evidence of an upturn in the housing market.
He added: “House prices are currently around 12% higher than the lows seen in the midst of the financial crisis, though they are still around 10% below the all time highs recorded in late 2007.
“Signs of a modest improvement in wider economic conditions and further modest gains in employment are likely to be lifting buyer sentiment.
“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 and Help to Buy schemes, are also boosting the demand for homes.