House prices rise at fastest rate for seven years

Housing market up

House prices increased at their fastest rate for seven years, according to the Royal Institution of Chartered Surveyors (RICS), while Bank of England figures show mortgage lending has reached its highest level since 2007.

The survey of surveyors also indicated that the number of people putting their homes up for sale increased in August, but still failed to meet demand.

Surveyors taking on new house sale instructions rose to a balance of 26% in August compared to 16% in July, RICS said. Surveyors who saw house prices rise rather than fall rocketed to 40% – the highest for seven years.

This latest sign of a recovering property market was fuelled by government housing aid packages such as Help to Buy and Funding for Lending, RICS said.

The Bank of England announcement shows that in the second quarter of 2013, gross mortgage lending to new borrowers reached £41.6 billion (the biggest quarter-on-quarter increase since 2007), as first-time buyers and buy-to-let investors rushed to take advantage of record low mortgage interest rates.

"During August, the number of would-be buyers increased yet again as increasingly accessible finance allowed more people to enter the market," RICS stated in its report.

Peter Bolton King, global residential director at RICS, continued: "It's not surprising that more and more people are looking to sell their homes. Buyers are out there and prices are on the up so if you're looking to move it's a good time to do so.

However, RICS acknowledged the risk of the UK's housing market over-heating, amid widespread fears of a property bubble.

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"What we don't wish to see, however, is prices rise to such an extent that they become unaffordable," he said. "For the market to work properly, it's vital that property is both accessible and affordable, and we'll be monitoring the situation very carefully as the housing sector continues to recover."

In early-September, Halifax announced that house prices in the three months to August rose by 5.4% year-on-year, the highest annual rate since June 2010.