Nationwide: House prices rise at fastest rate in three years Price of the average UK home hits £170,825 in July Prices on the up since the launch of Government schemes designed to give the housing market a shot in the arm Prices are around 12 per cent higher than the lows seen in the grip of the financial crisis By Rachel Rickard Straus Houses prices rose at their fastest rate in three years last month, in further signs the market is on the mend. Prices rose by 3.9 per cent to an average of £170,825, according to building society Nationwide. Prices saw their strongest annual upswing since August 2010 and rose on a month-on-month basis by a "robust" 0.8 per cent. Back on the up: House prices are starting to rise again year-on-year (Source: Nationwide) Lenders, estate agents and property websites have all been reporting surges in activity and rising confidence following the launch of Government schemes designed to give the housing market a shot in the arm. Mortgage rates across the market have plummeted since the Government launched a scheme called Funding for Lending a year ago, which gives lenders access to cheap finance. Initiatives called NewBuy and Help to Buy have also been introduced to give people with smaller deposits a helping hand, and lenders have been reporting more first-time buyers entering the market, which should help free up some stuck chains. The number of low deposit mortgage deals on offer has more than tripled in the year following the launch of the scheme, with 443 mortgage products available for people with a 5 or 10 per cent deposit. Renewed interest: Confidence is returning to the property market, Nationwide figures suggest That is an increase of 38 per cent from a year ago, when the scheme was launched, according to financial website Moneyfacts. Nationwide also suggests the market may have also been boosted by signs of modest improvement in the wider economy and gains in employment, lifting buyer sentiment. The boost has led to some stronger-than-expected house price increases this year so far, leading some experts to revise their predictions upwards for 2013. Concerns have been raised that Help to Buy, which will be fully fired into action next year and underwrite £130 billion of low-deposit mortgage lending with state guarantees, must not lead to a property "bubble," with borrowers overstretching themselves. Robert Gardner, Nationwide's chief economist, pointed out that the year-on-year growth was boosted by a low base to start from. House prices fell by 2.6 per cent annually in July last year. He said house prices are around 12 per cent higher than the lows seen in the grip of the financial crisis, although they remain about 10 per cent below the all-time highs recorded in 2007. Mr Gardner said the latest figures provide "further evidence of an upturn in the housing market." He added: "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." Mr Gardner said a lack of homes for sale and "subdued" building activity are keeping the supply of homes constrained, which is helping to keep prices up at a time when buyer demand has strengthened. Back on track: House prices are now well away from lows seen at the peak of the financial crisis (Source: Nationwide) Jonathan Hopper, managing director, property search consultants, Garrington, said: "Growth of less than one per cent is far from the heady days of double digit monthly price rises. But this feels like a healthy recovery of a property market that was genuinely in the doldrums. London continues to operate in a stratosphere of its own, but it no longer feels like the capital is the property market's sole prop. We should remember that it is still early days and the market, in many areas, is still way off its peak. But it is definitely in a much healthier state than it was this time last year. The average house price is now more than five times the average UK salary, according to Nationwide