House prices in the UK have now hit a record high, according to figures from the Office for National statistics. In August, the House Price Index surpassed its previous January 2008 peak by 0.3 per cent. Property values increased by 3.8 per cent during the year, up from a 3.3 per cent rise in the 12 months to July 2013.
However, perhaps slightly silencing fears of a price bubble, growth remained stable across most of Britain. Nevertheless, London prices increased faster than the UK average at 8.7 per cent and with supply continuing to be tight, it is proving hard to keep a cap on values in the city. When the capital and the south-east is removed from the equation, prices increased by 2.1 per cent in the 12 months to August 2013 across the UK. Including these two areas, England saw 4.1 per cent growth, Wales experienced a one per cent rise, while Scotland endured a 0.7 per cent fall.
Regionally, the East Midlands and the West Midlands enjoyed a strong August, with values increasing 3.8 per cent and 3.5 per cent respectively. Even the north-east and Yorkshire and the Humber, which suffered significantly during the financial crisis, posted growth of 2.2 per cent and 0.6 per cent. August also saw prices paid by first-time buyers increase by 4.9 per cent year-on-year, while owner-occupiers witnessed 3.3 per cent price gains over the same period.
The figures add validation to claims that the UK property market is undergoing a healthy recovery. According to the Council of Mortgage Lenders, Britain is indeed experiencing "broad based" growth. In fact, gross mortgage lending was also stable in August at an estimated GBP 16.6 billion. This 28 per cent higher than August 2012 when GBP 13 billion was recorded.
Bob Pannell, CML chief economist, said: "We attribute much of this turnaround to the improvement in funding markets generally, and also to the Funding for Lending Scheme. The Bank of England's approvals data suggests that the positive tone for house purchase and remortgage lending will continue."
- Friday 18 October 2013