House prices grew in all regions in Q3

27 September 2013

House prices increased across all UK regions during the three months to September for the first time in nearly six years, according to Nationwide.

The average UK house price rose by 2.2% in Q3 2013 to £170,918, compared to the previous quarter, and was up 4.3% year-on-year.
London was once again the strongest-performing region, with house price growth accelerating by 10% over the three months - the capital's first double digit growth since 2010. The average London home now costs an eye-watering £331,338, putting the average price 8% above the 2007 peak.
Climbing prices are exacerbating talk of a housing bubble in London and the South East and prompting concern about the effect of the introduction of the Help to Buy mortgage guarantee in January – which will guarantee up to 15% of mortgages on new-build or second-hand homes up to the value of £600,000 for borrowers who have a deposit of at least 5%.

However, responding to concerns, Chancellor George Osborne today announced the guarantee element of the scheme will be reviewed annually every September by the Bank of England's Fiscal Policy Committee.

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The committee will have the power to reign in the scheme by reducing the £600,000 limit if appropriate.

It had previously been asked to review the scheme only at the end of its originally planned three-years of operation.
However, shadow chancellor Ed Balls, wants an urgent review into whether the guarantee should be bought in at all. He said: "Instead of waiting a year, the Bank of England should review the details of the second phase of Help to Buy now before it goes ahead."

Other commentators are more optimistic about the annual review. David Hollingworth, spokesperson for mortgage broker London & Country, said: "There has been plenty of debate about whether the second stage of Help to Buy will only serve to inflate house prices and could cause a housing bubble.

"This announcement looks to appease those concerns by utilising the Financial Policy Committee as a monitor of the impact of the Help to Buy mortgage guarantee and able to tweak the scheme if it's felt that things are moving too quickly. It seems sensible to have the ability to keep the effect of the guarantee under review, giving the opportunity for a brake on the guarantee to be applied if necessary." 

He added: "While critics point to the rising house price figures, there is no doubt that this remains a very regional phenomenon."

For example, house price growth outside London and the South East remains modest. During the third quarter, in Wales prices were up 3.6% annually, according to Nationwide, and in Scotland there was growth of just 2.2%. Northern Ireland saw its first yearly price rise since 2007, at 0.9%.  

Meanwhile house prices fell in three UK regions in the month of August, according to the latest data from the Land Registry. Prices fell in the North East, the North West and Yorkshire & Humber.


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