South West house prices rise by 2.6% as figures hit UK record high

House prices in the South West rose by an average of 2.6% in the year to August 2013 according to figures released by the Office for National Statistics (ONS).

The average price of a house or flat in the region now stands at £230,000.

The 2.6% rise is lower than the overall UK figure of 3.8% and the 4.1% for England which are both skewed by a considerable rise in London of 8.7%. The South West figure shows the fourth highest regional rise in the UK, behind only London, the East Midlands and West Midlands.

House prices across the whole of the UK reached a new record in August according to the ONS. The house price index measured 185.8 in August, an increase of 0.3% on the previous peak of 185.5 in January 2008.

The ONS showed that the average price of properties in the UK is now £247,000.

In the 12 months to August 2013 UK house prices increased by 3.8%, up from a 3.3% increase in the 12 months to July 2013.

House price growth remains stable across most of the UK, although prices in London are increasing significantly faster than the UK average (8.7% as opposed to 3.8%).

The year-on-year increase reflected growth of 4.1% in England, 1.1% in Northern Ireland and 1.0% in Wales, with only Scotland experiencing a fall, where prices decreased by 0.7%.

Excluding London and the South East, UK house prices increased by 2.1% in the 12 months to August 2013.

On a seasonally adjusted basis, UK house prices increased by 0.5% between July and August 2013.

In August 2013, prices paid by first-time buyers were 4.9% higher on average than in August 2012. For owner-occupiers (existing owners), prices increased by 3.3% for the same period.

Some commentators may advise caution with regard to the ONS stats. Other recent figures, produced by lenders such as the Halifax and Nationwide, have shown house prices still some way short of their pre-crash peak in 2007 and the number of transactions down on the same period. 

The ONS figures are likely to provoke a further debate over fears of another house price 'bubble', with concerns that the Government's recently launched 'Help to Buy' scheme may further fuel house price inflation. The Bank of England has dismissed claims that the UK is in another bubble, but accepts that dangers may exist.

The new deputy governor of the Bank of England, Sir Jon Cunliffe, told MPs on the Treasury Select Committee this week:

"It doesn't look like we are in a bubble.

"In terms of whether it (Help to Buy) leads to households becoming overexposed, because they can borrow higher amounts, there is is a possibility it could do that, and that would create more of a risk."