UK house price hit record level with hike of 5.5pc
House prices surged by 5.5pc year-on-year in October to reach a new record high, official figures have shown.
A 1.4pc month-on-month uplift took average UK house values to £247,000, surpassing a previous series peak set just two months earlier by 0.2pc, the Office for National Statistics (ONS) said.
London recorded a 12pc annual increase in property prices, pushing the typical house value there to £437,000. Prices in London are nearly 17pc higher than their pre-financial crisis levels, while those in the South East and the East of England are now sitting around 1pc higher than their previous 2008 highs.
The ONS figures showed that prices rose in every UK region year-on-year as the housing market continued to pick up pace. As London continued to race ahead of the rest of the UK, Yorkshire and the Humber recorded the smallest annual increase, with a 0.8pc annual uplift taking average prices there to £167,000.
A house in London is now typically worth almost three times one in the North East, which has the lowest average house prices at £148,000.
On a year-on-year basis, prices in England lifted by 5.7pc to reach £257,000 on average, by 2pc in Wales to £164,000 and by 3.3pc in Scotland to £184,000.
Northern Ireland, which has previously endured year-on-year falls in house prices of around 10pc as the economic downturn took hold, recorded a 4.8pc annual increase in prices in October.
But despite prices in Northern Ireland having returned to an upward path in recent months, at £129,000 on average, prices there are still 50pc below their 2007 peak.
England remains the only UK country where property prices are above their pre-crisis high and prices in both Scotland and Wales are still around 6pc below their 2008 peak levels.
Fears of a looming house price bubble have been growing in recent months as a flurry of would-be home-buyers has entered the market following Government schemes such as Funding for Lending and Help to Buy which have widened mortgage availability.
Funding for Lending gives lenders access to cheap finance on condition they pass on the benefits of this to borrowers, while Help to Buy gives aspiring home- buyers with deposits as low as 5pc a helping hand on to or up the property ladder.
But analysts have warned that the supply of homes on the market is not enough to keep up with demand, which is putting upward pressure on prices as the market heats up.
The Bank of England recently took the first step in applying the brakes to the property market by announcing that it is refocusing Funding for Lending away from mortgages and towards helping small businesses borrow. Some experts have warned that this could spell the beginning of the end for ultra-low mortgage rates.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: "It is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens."
Howard Archer, chief UK and European economist for IHS Global Insight, said the "sharp acceleration" in prices in the ONS figures would fuel concerns of a bubble.
He said: "There is a very real risk that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme which was launched in October.
"Consequently, the decision of the Bank of England and the Treasury to end Funding for Lending support for lending to households from January looks a highly sensible decision."