The surge in values since the start of the year is thanks to record low mortgage rates and an £80billion Government lending scheme.
House prices were up 0.2% month-on-month in February and a typical three-bed semi now costs £162,638, a rise of £393 in four weeks, the Nationwide said. This follows an increase of 0.5% in January.
It is largely down to the Funding for Lending Scheme, which offers cheap credit to banks and building societies in a bid to persuade them to lend more. Since the initiative was launched last August, lenders have cut mortgage rates to below 2% for two-year fixed deals and 3% for five years.
Borrowers with large deposits have benefited most, but rates have also fallen for those with smaller deposits and first-time buyers.
Nationwide said the cost of a typical three-bed semi has now recovered to the same price as this time last year.
Mark Hayward, president of the National Association of Estate Agents, said: “The financial barriers that have plagued the market for so many years may be starting to ease as banks increasingly look at new ways to assist buyers.”
This was borne out by new lending figures from building societies. Gross lending was £2.4billion in January, up 25% on the same month last year. The number of loans approved was up by 30%.
Paul Broadhead, of the Building Societies Association, said: “A number of societies have released strong financial results, showing they are in a good position to lend in the coming year.”
Peter Williams, executive director of the Intermediary Mortgage Lenders Association, said: “There is industry optimism about the general outlook for the 2013 property market. The fact that the number of loan approvals remained above the six-month average suggests that overall conditions are continuing to improve.”
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