15:28 PM, 16th October 2013, About 8 years ago 3
The Office of National Statistics (ONS) have reported the average house price in Britain is now £247,000. This figure reported for August 2013 is 0.3% higher than the previous record in 2008.
Year on year house price inflation increased from 3.3% in July to 3.8% in August this year
However the Bank of England are warning that the Governments Help to Buy scheme could cause an artificial distortion of the market pushing up prices.
Martin Weale, a member of the monetary policy committee (MPC), confirmed average house price rises were “appreciably more rapid” than the Bank of England had expected. Weale said “if the mortgage-guarantee element of Help to Buy is not priced satisfactorily, it will add to demand while supply is weak leading to increased pressure on prices.”
“Rising house prices may make people feel cheerful and more prosperous, thereby supporting household spending, but rising house prices impose a burden on those who do not yet own houses but aspire to in the future. Like government borrowing, rising house prices can crowd out productive investment.”
Sir Jon Cunliffe, deputy governor of the Bank of England said he would keep a “very firm eye” on lenders, but “it is too early to say we are entering into a bubble.”
The Bank of England are however, known to be critical of short term artificial manipulation of the mortgage/housing market in favor of more sustainable long term growth of available lending provided by the finance markets themselves.
ONS key Findings:
However Economist are reporting overall activity to be well below levels recorded before the financial crisis and it is only London prices that are causing a concern as to whether they are sustainable or not.
If you take the weighting effect of high London prices most house prices around the country are still 10-15% below their pre-crunch peak and we are a long way off seeing a market wide housing bubble.
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