House prices up 8.5% year-on-year

The latest Halifax house price index shows that despite the average house price falling 0.2% in April, prices are up by 8.5% on year-on-year, at an average of £177,648.

The bank said demand for housing "remains strong", and that while monthly figures could be volatile, quarterly figures gave a better impression of the underlying trend in the market.

Stephen Noakes, mortgages director at Halifax, said: "On an annual basis, housing demand still remains strong. Housing demand continues to be supported by an economic recovery that is gathering pace, rising consumer confidence, low interest rates and wage growth finally beginning to outgrow consumer prices.

"However, with supply of properties being slow to respond to market conditions, stronger demand in the past year has resulted in upward pressure on house prices."

Commenting on the figures, Rob Thomas spokesperson for estate agent haart, said only London-centric commentators believe there may be a housing bubble expanding in the UK.

“The latest intervention from Bank of England’s deputy governor Sir Jon Cunliffe warns that ‘the growing momentum in the market is now…the brightest light on [the] dashboard’ for policymakers watching for signs of an overheating economy,” he said, “It’s not difficult to see why someone sitting in Mayfair, Westminster or Threadneedle Street might be starting to worry. Fuelled by the global super rich, Prime Central London property prices started recovering in 2009 and now stand some one-third higher than at their previous peak.

“But what’s the true story away from this Monte Carlo-on-Thames of prime Central London? According to our own national data, which most recently showed average UK property prices at £195,511, prices are still not recovered to their peak 2007 levels. This is supported by the Halifax house price index quarterly and monthly releases, which show that property prices remain lower in the first quarter of this year than at their peak more than seven years earlier in every region of the country – yes, every region including Greater London. The national average property price released by Halifax today is still well below 2007 levels.”

Thomas added that while London’s strong recovery has brought prices to within a whisker of the previous peak, the idea of a bubble must seem like a “bizarre joke” to anyone who bought a house in 2007 in much of the rest of the country. House prices are 18% off their peak in the North and a massive 53% lower in Northern Ireland.

“Perhaps it’s inevitable that, after the embarrassment of failing to see the financial crisis coming, the regulators would feel the need to have their finger on the trigger, itching to apply the weed killer at the first green shoots of recovery. But they do need to remember that spring always comes early to London.”