Bubble fears as house prices hit record high - Evening Standard

The boom in the capital helped drive UK prices to a new record average of £247,000 — beating the pre-crash peak recorded in January 2008, a feat that London achieved two years ago.

Excluding London and the South East, UK prices went up by just 2.1 per cent in the 12 months to August, official statistics revealed. 

London buyers paid an average price of £437,000 in August, which was down £1,000 from the July level.

But the good news for property owners deepened anxiety among economists that boom could turn to bust.

Howard Archer, of IHS Global Insight, said: "There is a significant risk that house prices could really take off over the coming months."

He said George Osborne's "Help to Buy" mortgage scheme, combined with a shortage of new properties, could be "increasingly  significant" in  London and the South East.

"It is therefore of vital importance that policymakers closely monitor the situation and are prepared to act quickly and decisively if signs of a housing market bubble start to mount."

Housing pressure group Shelter issued a report warning that even two-earner families risk being priced out of the market. It called on the Government to stop promoting price rises and build 250,000 new homes a year.

A study found fewer than one in five London families would be able to own property by the age of 65 if house price inflation continued.

"We need an end to the era of unaffordable and rising house prices, if families are to have a chance of owning a home of their own," said Shelter.

"It's time for an era of stable house prices — with politicians taking the lead — so that families on normal incomes can catch up."

Meanwhile, inflation has stayed stubbornly at 2.7 per cent, the Office for National Statistics said, with falling  fuel prices offset by higher-than-usual air fares.

Food inflation stood at around 4.8 per cent, still well ahead of wage increases but little changed on last month, with prices up for many foods including plums and organic apples, cauliflowers, onions and premium potato crisps.