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UK house prices rising 'at highest rate since 2010' UK house prices 'rise at fastest rate since 2010'
(about 1 hour later)
UK house prices rose 5.4% in the three months to August compared to the same period last year, according to the Halifax's latest house price survey. UK house prices have risen by 5.4% in the year to August, according to the Halifax's latest house price survey.
This is the highest annual rate since June 2010. It is the highest annual rate since June 2010.
Prices over the quarter were 2.1% higher than the previous period, the lender said. On the Halifax's measure, the average price of a house also went through the £170,000 mark for the first time in five years.
Housing market activity was up thanks to an improving economy, low interest rates, and government-backed schemes such as Help to Buy, it said. However, the figures are still well below the peak of the market in August 2007, when the average price was almost £200,000.
Earlier this week, the Organisation for Economic Co-operation and Development (OECD) increased its 2013 growth forecast for the UK economy to 1.5% from an earlier estimate of 0.8%. The Halifax said housing market activity was up thanks to an improving economy, low interest rates, and government-backed schemes such as Help to Buy.
Last month, Nationwide reported a 1.4% rise in the three months to August from the same period last year, the biggest increase since mid-2010, it said. Earlier this month the Nationwide said house prices in August were rising at an annual rate of 3.5%, slightly slower than in July.
The Nationwide compares prices in one month with the same month a year ago.
However, the Halifax compares a three-month period with the three-month period in the previous year.
Martin Ellis, the Halifax's housing economist, said: "Overall, house prices are expected to rise gradually over the remainder of the year."Martin Ellis, the Halifax's housing economist, said: "Overall, house prices are expected to rise gradually over the remainder of the year."
The Halifax believes below-inflation earnings rises "are likely to act as a brake on the market". The Halifax believes below-inflation pay rises "are likely to act as a brake on the market".
Property bubbleProperty bubble
The number of mortgage approvals for house purchases - an indicator of completed house sales - rose 4% to 60,600 between June and July. The Halifax estimates the average price of a house or flat in the UK is now £170,231. The last time house prices were higher than £170,000 was in September 2008.
This is the first time that approvals have exceeded 60,000 since early 2008. The number of mortgage approvals for house purchases - an indicator of completed house sales - rose by 10% between the first and second quarters of 2013.
Help to Buy is available to both first-time buyers and people moving into a newly built home worth up to £600,000. It offers a government-backed loan of up to 20% of the price of the property and aims to make it easier to buy property with a deposit of just 5%. In July alone there were 60,600 approvals, the first time the number has exceeded 60,000 since 2008.
The rise in prices and market activity, coupled with the Help to Buy scheme have increased fears that the country could be heading for another property bubble. The rise in prices and market activity, coupled with the Help to Buy scheme, which offers a government-backed loan of up to 20% of the price of the property, have increased fears that the country could be heading for another property bubble.
But last month Mark Carney, governor of the Bank of England, said he was "acutely aware" of the risks and had a "toolkit" of measures he could employ to combat unrestrained mortgage lending. But last month Mark Carney, governor of the Bank of England, said he was "acutely aware" of the risks, and had a "toolkit" of measures he could employ to combat unrestrained mortgage lending.
Matthew Pointon, property economist at consultancy Capital Economics, said: "A short-term imbalance between housing demand and the number of homes on the market is driving price increases.Matthew Pointon, property economist at consultancy Capital Economics, said: "A short-term imbalance between housing demand and the number of homes on the market is driving price increases.
"But the rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand.""But the rise in wholesale interest rates seen over the past few weeks may soon start to feed through to mortgage rates, dampening demand."
There are already some signs that market may be slowing, with the Halifax reporting that prices rose 0.4% in August from July, a lower rate than economists had forecast and lower than July's 0.9%. There are already signs that mortgage rates may have bottomed out, with some lenders increasing rates earlier this week.