House price increases accelerated in
April, rising by 9.9% compared with the same month a year ago, according to
The typical price of £260,000 grew at
the fastest rate for nearly four years.
The Office for National Statistics
(ONS) said prices rose strongly across the UK, with Wales, Scotland and
Northern Ireland all picking up pace.
London, where prices were up 18.7%,
remains the driving force behind the housing revival.
But excluding London and the South
East of England, the cost of a home was still 6.3% higher than 12 months
The governor of the Bank of England
said he would take prompt action, if action was needed.
Writing in the Bank's annual report,
Mark Carney said: "We will not hesitate to take further proportionate and
graduated action as warranted," Carney said. He added that the Bank's
Financial Policy Committee, which is meeting today, had announced measures in
November to reduce stimulus to the housing market."
In March, the ONS calculated that the
annual rate of increase had fallen back slightly to 8%, so the April figures
shows the market accelerating once again.
April house price inflation was 10.4%
in England, 3.3% in Wales, 4.8% in Scotland and 2.6% in Northern Ireland - all
higher than the previous month.
First-time buyers continue to
experience more rapid price increases than people moving house.
correspondent Andy Verity writes:
A rise in London house prices of
18.7% in the year to April is more than 20 times as fast as the average rise in
pay (up 0.9%). Even if you strip out London and the south-east of England,
prices nationally are up 6.3%.
We need a reliable measure of what
house price inflation is doing to the cost of living. Do we have it? Not
exactly. The ONS leaves housing costs out of its Consumer Price Index on the
grounds that a house is an asset, not something you consume. But for many
people - especially younger people - housing costs are by far their biggest
The ONS answer until now has been to
produce another statistic, CPIH, which includes housing costs. Yet, even as
house prices roared away, CPIH didn't rise but actually dropped, from 1.6% to
How? Because it measures
owner-occupiers' housing costs by looking at what they would pay if they
rented. Not the mortgages people actually pay. And the numbers assume that
housing costs make up just 15% of the average expenditure.
But ask young people whether they
spend just 15% on housing - and you'll get a funny look. Many older people may
have paid off their mortgages. The statistics mask gaping differences between
the generations. Perhaps younger people could use an alternative measure of the
cost of living that reflects their reality - where housing costs are by far the
Campbell Robb, the chief executive of
Shelter, said: "Each rise in prices means more people stuck living in
their childhood bedrooms, or trapped in the cycle of moving from one expensive
rented home to the next.
"This is a problem that the
government can fix. We need a new generation of quality part-buy, part-rent
homes, and to make sure that small builders can get hold of the land and
finance necessary to build them.
The ONS reports its figures a month
later than other organisations, though the calculation is based on the widest
sample of mortgages.
The Halifax has already estimated
May's year-on-year increase at 8.7%.
The Nationwide building society said
May saw an annual rise of more than 11%, although it suggested that the market
might be coming off the boil.
Last week, Chancellor George Osborne
announced plans to give the Bank of England the power to impose a cap on home
loans related to income or the value of the house.
At present, the Bank can advise on
such a cap, but not impose it. The new power should be in place before the end
of this Parliament in 2015, the chancellor said.