By Jonathan Davies

The growth of house prices is picking up speed again, according to Nationwide.

The mortgage lender said house prices rose by 3.5% in July compared with the same period last year. It compares with the annual growth of 3.3% seen in July.

Between June and July prices were up 0.4%, raising average house prices to £195,621.

But Nationwide again raised concerns over the imbalance between supply and demand in the housing market. Its report said there was "encouraging" demand, but supply was "unclear".

Nationwide's chief economist Robert Gardner said: "The number of new homes under construction has started to pick up, albeit from historically low levels, and further increases are required if a sustainable recovery in the housing market is to be maintained over the longer term."