House prices hit record high during summer

Tue 15 Oct 2013

UK house prices hit a record high in August, according to the latest figures from the Office for National Statistics.

The ONS said that its index, which measures purchases financed with mortgages over the month, had surpassed its previous peak by 0.3% to hit 186 – its highest level since 1968. It put the average price of a UK home at £247,000.

According to the ONS figures, the rate of house price inflation gathered pace through the summer, with the year-on-year increase reaching 3.8% in August, up from 3.3% in July. The year-on-year increase reflected growth of 4.1% in England, 1.1% in Northern Ireland and 1.0% in Wales, offset by a fall of 0.7% in Scotland.

However, the ONS noted that while "house price growth remains stable across most of the UK ... prices in London are increasing faster than the UK average".

Its index showed prices in London rose by 8.7% in the 12 months to August, and that when figures for the capital and the rest of the south-east were stripped out, UK house prices were up by 2.1% over 12 months.

Only London and the south-east are higher than at their previous peak. However, the east of England and the south-west are coming close, the ONS said.

House prices have been driven up by rising confidence among consumers and an increase in availability of mortgages, particularly at higher loan to values.

The ONS figures cover a period before the launch of the second wave of the government's Help to Buy scheme for borrowers with small deposits, although lending figures show that banks and building societies were already making more loans available to first-time buyers.

The ONS data showed that new entrants to the housing market have seen a steeper rise in prices than homemovers, with prices paid by first-time buyers up 4.9% on August 2012's figure, compared with a 3.3% rise for movers.

In August 2013, the average price paid for a house by a first-time buyer was £185,000, while existing owners paid an average of £283,000.

Despite the headline figures suggesting that prices are running away, economists said activity was still well below the levels recorded before the financial crisis began, and only London was giving real cause for concern.

Howard Archer, chief UK economist at IHS Global Insight, said: "While the strength of house price rises in London is becoming an incr

easing concern and pushing up the overall national increase in house prices, the ONS data support the view that we are currently a long way off from an overall housing market bubble emerging.

He added: "In fact, in many areas house prices are still well below their 2007 peak levels and rising only modestly at the moment."

Source; The Guardian

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House prices hit record high during summer