Housing upturn as prices rise 0.5%
House prices have risen at their fastest rate in more than six years amid further signs of a "burgeoning recovery" spreading across the country.
Prices recorded a 0.5% month-on-month increase in September, marking the highest monthly increase seen since May 2007, property analysts Hometrack said.
More than two-fifths (41%) of property markets registered higher prices across England and Wales in September, showing the broadest upturn in prices seen since February 2007. One year ago, just 6% of markets saw prices increase.
The report follows similar findings from Nationwide building society last week, which reported evidence that the market pick-up "is becoming increasingly broad-based".
Fears have been raised that Government schemes to kick-start the housing market, such as Funding for Lending and Help to Buy, could be helping to stoke up a house price bubble, with people over-stretching themselves.
Mortgage availability has seen a sharp increase over the last year and the schemes have encouraged more low-deposit lending, which has fuelled demand from home buyers while the number of homes on the market has remained in relatively short supply.
Hometrack said that demand has been on the rise for eight months in a row. But while 1.4% more potential buyers registered with estate agents in September, the supply of homes on the market fell by 0.3% as continued growth in sales eroded stock levels.
Homes are now spending less than eight weeks on the market and in London they are being snapped up in less than four weeks typically. On average, sellers are achieving around 94.7% of the asking price, marking a slight increase on August. In London, sellers are typically getting 96.5% of the asking price.
But Hometrack said that talk of a housing bubble being created across the country is "overdone".
It said that many housing markets outside London are only just starting to see growth in house prices for the first time in five years. While more than 70% of markets in London and the South East are seeing increases in house prices, this proportion is limited to less than one-third elsewhere.
Its report said: "In the near term we expect prices to continue to rise but the market remains very sensitive to changes in demand and especially changing expectations over the outlook for mortgage rates."
House prices remained flat month-on-month in the North East and Yorkshire and Humberside. They rose by 0.1% in the North West, by 0.2% in Wales, East Anglia, the East Midlands and the West Midlands, by 0.3% in the South West and by 0.6% in the South East. London posted the biggest monthly increase, at 0.8%.
Chancellor George Osborne has given new powers to the Bank of England's financial policy committee (FPC) to report on the Government's Help to Buy scheme annually.
The FPC, which said last week it was "vigilant" and ready to act over the threat of an overheating housing market, will now assess the scheme every September. It had been due to look at the scheme only after three years.
Help to Buy was launched earlier this year. A second stage of the Help to Buy scheme - allowing people to acquire a property with a deposit of just 5% - is being brought forward to begin next week, three months ahead of schedule. The scheme was due to be extended to existing homes worth up to £600,000 from January.
Richard Donnell, director of research at Hometrack, pointed to a "burgeoning recovery across regional housing markets, especially across the South East."
He continued: "The survey has highlighted a steady improvement in underlying market conditions outside of London for the last 18 months.
"Now we are seeing continued house price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery."