The Nationwide Building Society has reported that UK house prices rose by 0.6% in November taking the annual rate of increase to 6.5% – the strongest pace since July 2010, though prices are still around 6% below the all-time high recorded in late 2007.

The average house price in the UK is now £174,566.

Robert Gardner, Nationwide’s chief economist, said: “Activity in the housing market has picked up strongly in recent months. The number of mortgage approvals for house purchase reached 66,735 in September, 34% higher than the same period of 2012. A large part of the improvement can be attributed to further improvements in the labour market and the brighter economic outlook, which has helped to bolster sentiment amongst potential buyers.

“Policy measures aimed at keeping down the cost and improving the availability of credit are also playing an important role. Indeed, mortgage rates have declined significantly from the already low levels prevailing last year.

“For example, Bank of England data indicates that the interest rate on two year fixed rate mortgages for those with a 10% deposit has fallen from 5.6% to 4.4% over the past 12 months. For a buyer purchasing the typical UK home over 25 years, this equates to a reduction in monthly payments of around £110 (£1,320 per year) at the current average house price.”