House prices up 5.4% on last summer as the average property value tips back over £170k mark, says Halifax
Average property price soars to £170,231 - £10,000 higher than last summer
Seventh month in a row values have increased
Economic improvement and government help boost demand
Fears of new property bubble
By Lee Boyce
Published: 05:00 EST, 6 September 2013 | Updated: 05:57 EST, 6 September 2013
It has been a sizzling summer for property prices in Britain, with the average house value having shot up 5.4 per cent over the past year, figures from the Halifax House Price Index show this morning.
Halifax's figures show the average house price in Britain increased for the seventh month in a row. The average property has leapt £4,000 since Easter.
The lender says prices were up 0.4 per cent monthly resulting in the average property value soaring to £170,231. This time last year the figure was almost £10,000 lower at £160,292.
Price boom: The average house value has tipped over the £170k mark according to Halifax
Halifax says the 5.4 per cent rise is higher than July's 4.6 per cent increase and is the highest annual house price inflation since June 2010. The yearly rate has picked up from a far smaller 1.1 per cent growth in March.
The figures will further stoke fears that the Government's push to get the property market moving again risks reflating a property bubble, when the cost of a home is already above its long-term average in relation to wages.
Martin Ellis, Halifax housing economist, said economic improvement and government schemes have helped boost demand, although activity is still being held back by the squeeze on household budgets.
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He said: 'Housing market activity is also on an upward trend with the number of mortgage approvals for house purchases – a leading indicator of completed house sales – 10 per cent higher in the three months to July compared with the previous quarter after allowing for seasonal influences.
'Nonetheless, relatively modest economic growth and below inflation rises in earnings are likely to act as a brake on the market. Overall, house prices are expected to rise gradually over the remainder of the year.'
HALIFAX VS NATIONWIDE: HOUSE PRICES
Halifax's report echoes similar findings from Nationwide Building Society last week showing the housing market revival continues to gather pace - and also that values have tipped over £170,514.
Lenders, surveyors, estate agents and property websites have all been reporting a strong pick-up in activity following the launch of Funding for Lending, which has prompted a big improvement in mortgage availability and rates.
Other initiatives such as NewBuy and Help to Buy have been aimed at giving people with smaller deposits a leg-up.
However, there are fears these schemes - which have encouraged a flood of first-time buyers - could result in a dangerous new housing bubble in Britain.
A report by estate agent owner LSL showed 26,100 homes in the UK were sold to first-time buyers in July – up 45 per cent on the same month last year and the most since November 2007.
Rival estate agent Connells said there were 40 per cent more first-time buyers last month than in August 2012.
Experts at Schroders said it could lead to an 'Osborne boom' where soaring house prices drive a strong economic recovery.
But Nicholas Ayre, managing director of homebuying agency Home Fusion, doesn't believe a property bubble is imminent. He said: 'Prices continue to rise but not as robustly as in the past few months, suggesting fears of a house price bubble are overstated.
'A bubble implies that people are buying anything at any price and they aren't. Buyers are being selective and sellers who are set on a certain price with little regard to what the market thinks the property is worth are struggling to sell.'
Affordability fear: The house price-to-earnings ratio shows how property prices never fell back to their average affordability in the post credit crunch slump.
Halifax also says more properties are coming on to the market. While demand has increased more quickly than supply, surveyors have reported a rise in the number of homeowners providing instructions in each of the last six months, according to RICS.
Further improvements in the availability of properties for sales could help to bring demand and supply into better balance, constraining the upward pressure on prices.
Ben Thompson, managing director of Legal & General Mortgage Club, said: 'Today's figures clearly confirm that the market is continuing to gather pace and that the recovery is well and truly on track.
'At the moment that pace is sustainable especially when you consider the downturn we have had since 2007. However, the picture remains regional and patchy across the UK showing there is still work to be done in some areas.'
Halifax: House prices up 5.4% on last summer