London: Asking prices for homes in Britain are 5.5 per cent higher than a year ago, property website Rightmove has said as it urged the government to boost the supply of new homes to avoid a house price bubble. Rightmove figures, which are not seasonally adjusted, show the price of property coming on to the market has risen 8.8 per cent in the first eight months of the year.
Record low mortgage rates, government lending incentives and rising optimism in Britain’s economic recovery have fuelled a marked pick up in house price inflation in recent months. Mortgage lender Halifax reported prices rose an annual 4.6 per cent in July and a survey last week from the Royal Institution of Chartered Surveyors suggested house prices were rising at their fastest pace since 2006.
The rally has been most marked in London where prices are up 10.2 per cent on the year, according to Rightmove.
With house prices already rising faster than inflation, the government is under pressure from some quarters to abandon plans to offer state-backed guarantees to riskier homebuyers. The scheme, part of the “Help to Buy” initiative announced by the government in their March Budget, is due to take effect in January.
“Demand is already on the up, and that’s before the rollout of phase two of the Help to Buy stimulus,” said Rightmove director Miles Shipside. “It is now critical that the supply of property improves so that the goal of a significant increase in transaction numbers is not overshadowed by an unsustainable boom in property prices.”
The first phase of the government’s Help to Buy scheme took effect in April and offers subsidies to buyers of new-build properties.