House prices have seen the fastest pace of growth since December 2022, as the annual growth rate jumped from 1.5% in June to 2.1% in July.

Nationwide’s house price index revealed that the average UK house price stood at £266,334 in July, increasing by 0.3% month-on-month.

However, prices are still around 2.8% below the all-time highs recorded in the summer of 2022.

The building society said the housing market has remained "relatively steady in recent months", with the number of mortgages approved for house purchase standing at around 60,000 per month.

This is around 10% below the level prevailing before the pandemic struck, which Nationwide said is "still a respectable pace", given the higher interest rate environment.

Personal finance analyst at Bestinvest, Alice Haine, said: "The housing market is exhibiting signs of a resurgence following its rocky ride in 2023 when high borrowing costs and low supply stifled activity. The number of sales agreed in the four weeks to 21 July jumped 16% on the same period a year ago, according to separate data from Zoopla out this week. This follows a strong run in the first half of the year and agents now find themselves with the highest number of homes on their books in six years - a sign that sellers are returning to the market in droves in the hope of securing a good deal.

"While the ramp up in activity is having some impact on price levels, higher levels of stock can also keep a lid on prices. An interest rate reduction from the Bank of England (BoE) today could add serious momentum to the market if buyers and sellers who have been waiting patiently in the wings for borrowing conditions to improve are now spurred into action.

"If the BoE goes ahead with a rate reduction, it will be the first since the early days of the COVID-19 pandemic in March 2020 giving first-time buyers and existing homeowners respite from punishingly high borrowing costs. Interest rates are unlikely to return to the record low of 0.1% borrowers enjoyed between March 2020 and December 2021 when the central bank then began its aggressive tightening cycle to curb rapidly rising inflation, but a rate cut with the prospect of more in the future will certainly offer the reassurance movers need."

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