If you have a story call our newsdesk on 01722 426511 or email us. To advertise call 01722 426500.
House prices reach all-time high
House prices have surpassed their 2007 peak to stand at a new all-time average high of £188,903 across the UK in June, Nationwide has reported.
London property values leapt by 25.8% year-on-year to reach £400,404 typically, marking the strongest annual rate of growth seen in the capital for 27 years.
Prices across the UK have jumped by 11.8% over the last year, representing the biggest annual uplift seen since 2005. Values across the country also increased by 1.0% month-on-month, the building society said.
Matthew Pointon, a property economist at Capital Economics, described London house prices as "growing at the fastest pace since the bubble of the late 1980s".
He warned: "The risk of a damaging house price correction at some point in the next few years is growing."
Mr Pointon said that a lack of supply of homes on the market is likely to keep an upward pressure on values, despite some recent signs that demand from potential buyers is starting to fade slightly.
But Paul Smith, chief executive of estate agent Haart, said that while an annual increase in London house prices of nearly 26% is "unsustainable", this does not mean there is a bubble.
He said: "Bubbles burst and London house prices - while completely unaffordable to many - are not about to collapse. That said, the market is correcting as wages are no way keeping up with property rises in the capital."
June marks the first time that London house prices have broken through the £400,000 threshold. But s trong annual price gains were not just confined to London and southern England. Nationwide said in Southern Scotland, which includes Ayrshire and the Borders, prices are up by 14% on the previous year, as are prices in Belfast in Northern Ireland.
In South Wales (West), which includes the Vale of Glamorgan, Bridgend and Swansea, house prices have seen a 12% year-on-year jump.
After London, Cambridge was named as the top-performing city for the housing market. Prices in Cambridge have surged by 20% over the last year to reach £419,187 typically. St Albans was the third strongest-performing city, with values lifting by 18% annually to reach £451,800 on average.
Newcastle was named as the worst-performing city, with a 3% annual uplift taking prices there to £181,473 typically.
Across the UK, all regions recorded annual price gains for the fourth quarter in a row, with the largest being in London and the smallest in Scotland, where values have risen by 5.4% annually to reach £141,872 on average.
In Wales, property prices are up by 9.3% on a year ago, now standing at £145,812 typically, while in Northern Ireland, where the housing market is still recovering from some sharp falls seen in the wake of the financial crisis, values have risen by 8.4% annually to reach around £117,150. Prices in Northern Ireland are still around half the level they were at their peak.
Prices lifted annually by 16.4% in the Outer Metropolitan commuter belt area, by 14.0% in the Outer South East, by 9.8% in the South West, by 9.5% in East Anglia, by 8.3% in the East Midlands, by 8.2% in the West Midlands, by 8.1% in the North, by 7.1% in the North West and by 7.0% in Yorkshire and Humberside.
Robert Gardner, Nationwide's chief economist, said house prices surpassed their 2007 peak levels in the second quarter of this year, "just as UK economic output is likely to have surpassed the high water mark reached before the financial crisis".
Last week, the Bank of England moved to put curbs on riskier mortgage lending by announcing that loans of 4.5 times a borrower's income or higher should account for no more than 15% of new mortgages issued by lenders.
The Bank also said that lenders should apply a new "stress test" ensuring that borrowers can keep up their mortgage repayments in the event of a rise of up to 3% in interest rates over the first five years of the loan.
There have been some signs of some heat coming out of the housing market since the launch of stricter mortgage lending rules under the Mortgage Market Review (MMR) at the end of April, which mean mortgage applicants must be quizzed in more detail about their borrowing habits.
Experts have said it is too soon to know whether the impact of these new rules will just be temporary, as they bed in.
Mr Gardner said that the Bank's new measures are "unlikely to have a significant impact on housing transactions or the pace of price growth in the near term".
He continued: "Most major lenders are already using a stress rate in their affordability calculation that is broadly consistent with the new stress test.
"Similarly, the proportion of house purchase loans at or above 4.5 times borrowers' income is currently some way below the 15% cap."