House prices rise by 1% as Help to Buy is rolled out
House prices in the South West have rallied in the past few weeks, rising by 1% in the past month. Selling prices of Westcountry property are now 2.7% higher than they were a year ago, according to the latest figures from Nationwide.
Prices lifted by 2.7% year-on-year to reach £191,422 on average, the building society said. On a monthly basis, prices rose by 1% in October alone.
"We are definitely seeing a very different market to the one even three months ago," said Duncan Ley of Chesterton Humberts in Truro. "There is a mood of increased optimism among buyers and we have seen a dramatic increase in transactions."
Part of the cause is attributed to the launch of a new phase of the Government's flagship Help to Buy scheme. Help to Buy offers state-backed mortgages to people with deposits as low as 5% and was brought forward to this October from January 2014.
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Nationally, critics have argued that the Help to Buy scheme could lead to a housing bubble. The latest figures from Nationwide have found that London's house prices rose by 4% in October and are up 10% on the same month in 2012. London's average house price now stands at £331,338, while the UK average is £170,918, up 2.2 % in October.
A flood of reports have pointed to housing market activity hotting up in recent months. Earlier this week, the Bank of England reported that the number of mortgage approvals granted to home buyers reached a five-and-a-half year high in September, even before the new phase of Help to Buy had been fired into action.
Robert Gardner, chief economist at Nationwide, said: "House price growth has accelerated as buyer demand has picked up more quickly than the supply of new homes."
However, the South West spokesman for the Royal Institution of Chartered Surveyors says he remains confident that a housing bubble in the Westcountry remains "unlikely".
"Sales levels are improving after six years of difficulty and this does feel like a consistent picture across the region," said Roger Punch of RICS, who runs the Plymouth office of Stags Estate Agency.
"But I don't see much evidence of South West prices rising dramatically. Across the region they remain about 10% below their highest levels when the market hit its peak in 2006."
Elsewhere in country, the property market is far more volatile. Two London boroughs, Kensington and Chelsea and Westminster, have seen asking prices rise by 12% in the past four weeks.