Average house prices in the UK have hit an all-time high of over a quarter of a million pounds after a 4% growth in prices over the last year.
Most of that increase has come from London pulling up the average. The Office for National Statistics said that London prices have surged upwards by 8.7% over the last 12 months, with the East Midlands seeing the second-highest increase at 3.8%.
On average, prices in August were up 3.8% higher than last year, hitting £247,000, which is higher than the pre-crash peak of January 2008.
Excluding London and the South East, average prices rose by just 2.1% in the 12 months to August.
The news will stoke fears that the boom in prices could turn to bust, particularly as demand for houses has soared due to the government’s controversial Help to Buy scheme.
The chief executive of homeless charity Shelter, Campbell Rob, said that the rise in house prices would make housing even less affordable for some people.
He said: “Our rollercoaster housing market may make headlines, but these days rising house prices don’t have a feel-good factor, and for good reason. Nobody wants to return to the bad old days of house prices rising then crashing.”
However, Howard Archer, chief European and UK economist for IHS Global Insight, moved to calm fears of a UK housing bubble, adding: “While the strength of house prices in London is becoming an increasing concern and pushing up the overall national increase in house prices, we are currently a long way off from an overall housing market bubble emerging.”
The ONS figures come less than two weeks after the Centre for Economics and Business Research (CEBR) said house prices would soar by almost a quarter over the next five years – with homes in London set to hit an average of more than £500,000 by 2018.
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