Yahoo Finance Chancellor Acts As House Prices 'Accelerate'
As a report highlights accelerated house price growth in September, it has been revealed that the Chancellor has asked the Bank of England to keep a closer watch for evidence of a price bubble.
According to the latest Nationwide House Price Index, UK prices rose 0.9% month-on-month, leaving them 5% higher than in September 2012 - the strongest pace of growth since July 2010.
The growth was largely fuelled by prices in London and South East England, Nationwide said.
Its chief economist Robert Gardner said: "There are also signs that the pickup is becoming increasingly broad-based.
"For the first time since 2007, all thirteen UK regions experienced annual house price growth in the third quarter of 2013.
"However, the southern regions of England continued to see the strongest rates of growth – especially London, where the annual rate of growth reached double digits in the three months to September.
“The gap (NYSE: GPS - news) between house prices in the North and the South of England reached a new high in the third quarter, rising above £100,000 for the first time.
"The typical property price in the South of England is now 74% above its Northern equivalent," he said.
On the prospect of a bubble, Mr Gardner added: "The acceleration in house price growth from the subdued pace prevailing throughout 2011 and 2012 has been surprisingly quick, though house prices are still some way below their previous peaks in most parts of the country.
"Overall, UK house prices are still around 8% below their 2007 highs.
"Only in London are prices at an all-time high, 8% above the previous peak."
It is against that backdrop that George Osborne has given the Bank of England greater powers to prevent the Government's Help to Buy scheme from causing a property boom - with borrowers over-stretching themselves.
From January the Help to Buy initiative will provide mortgage guarantees on properties worth up to £600,000 but the Bank's Financial Policy Committee (FPC) will now make annual reviews and could recommend that the cap is reduced.
It was initially due to only assess the scheme after three years.
The FPC could also make loans more expensive by recommending that the Treasury raises the fees paid by lenders for the guarantees.
The Business Secretary Vince Cable previously voiced concerns on Sky News over the second phase of Help To Buy.
But Mr Osborne insisted: "Let's not pretend there's a housing boom," saying it was important to "go on trying to fix specific problems in our financial system."
The Bank has previously said there is no evidence of a bubble but said it would be watching closely so it could intervene if necessary.
