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Funding for lending bumps up house prices by 3.7%

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The Funding for Lending Scheme (FLS) is the reason behind a 3.7% increase in house prices during the last year, according to Halifax.

Its latest house price index the lender said that house prices reached a UK-wide average of £167,984 during the month of June.

This was 3.7% up on the same month in 2012, the biggest year-on-year increase in almost three years.

Halifax housing economist Martin Ellis said that the rises were down to a combination of reasons but that lack of supply and cheap mortgage finance were key reasons for the rise.

“Improved confidence in both the housing market and the economy, combined with a shortage of properties available for sale, appear to be pushing up house prices,” he said. “The Funding for Lending Scheme is also likely to be boosting the market by helping to reduce mortgage rates.

“There are also early indications that the Help to Buy equity loan scheme may be stimulating demand. Despite these signs of improvement in the market, the still subdued economic background and weak income growth are expected to remain significant constraints on housing demand and activity during the second half of 2013.

“Activity has also improved in recent months. Both home sales and mortgage approvals for house purchase – a leading indicator of sales – increased in May.”

Giles Hannah, managing director of estate agency VanHan, added: “It becomes increasingly clear that the UK has two distinct markets – London and the rest.

“It is no surprise that London now has the highest price gap compared to rest of the UK in terms of average price rises because it is so internationally facing. There is a continued influx of foreign capital into prime central London, particularly for property costing up to £6 million.”

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