The figures showed a 0.8 per cent rise in prices during July, bringing the annual rate of increase to 3.9 per cent, making it the biggest year-on-year increase since August 2010 and considerably higher than June’s figure of 1.9 per cent.
Although the year-on-year figure is slightly skewed by the fact that there was a sharp downturn in July 2012, therefore giving this year’s figure an artificial look, the three-month figures still showed the fastest rate of growth since 2010, registering a price rise of 1 per cent.
The average price of a house now, according to the building society, is £170,825, although this is still around 10 per cent below the all-time high recorded in late 2007, when the UK average price of a house hit £186,043.
The building society have said that house prices are being driven up by a combination of two things; firstly a shortage of homes for sale, which were already down by 8 per cent in the first quarter of 2012, and secondly the fact that more mortgages have become available through the Government’s Funding for Lending Scheme (FLS), which allows lenders to offer money to home buyers at more advantageous rates than before.
However, some commentators fear that the pace of growth in the housing market may lead to a housing bubble, which could be stoked by another Government measure, the Help to Buy scheme, the second part of which will be launched in January 2014.
Under the Help to Buy scheme, banks and building societies will be able to buy a taxpayer-backed guarantee from the Government on high loan-to-value mortgages.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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