A RECORD increase in asking prices for homes has led to escalating fears that an unsustainable property boom could jeopardise the economic recovery.
New figures published today show house sellers’ asking prices rose by 8.9 per cent in the year to May – the highest ever increase at this time of year resulting in all time high of £272,003.
Much of this has been fuelled by massive rises in London house prices, but estate agents confirmed the buoyant market is leading to vendors in Yorkshire raising expectations and in some cases asking too much.
Figures from Rightmove show Yorkshire had the biggest increase in asking prices outside of the South of England this month.
The latest figures come as the Governor of the Bank of England Mark Carney voiced concerns that Britain’s booming housing market was the “biggest risk” facing the UK economy.
Mr Carney signalled he was ready to take action to cool Britain’s surging housing market. The Bank could impose a new “affordability test” for borrowers and advise the Government to rein in its controversial Help to Buy scheme –which provides taxpayer-backed mortgages for first-time buyers.
The Governor also warned that an increase in approvals for large mortgages could lead to another “big debt overhang” building up.
The latest figures show a month-on-month increase in asking prices in May of 3.6 per cent, or £9,409, the highest ever seen for the time of year. In Yorkshire the figure was 2.7 per cent, the highest rise in the North and Midlands.
London led the way with a 16.3 per cent year-on-year increase, compared with 4.9 per cent in the rest of the country.
However, Paul Wilson of Dacre Son and Hartley in Leeds claimed London’s increases were having a knock-on effect further north.
He said: “All the talk of the rising prices in London and a supposed nationwide bubble has created a wave up the country of vendors raising their expectations, and in some cases putting their property on the market for too high an asking price than is realistic.”
The Organisation for Economic Co-operation and Development has called for curbs to the Government’s Help to Buy scheme but housing and regeneration specialist Keepmoat said that efforts should be focused on supporting house builders.
The Doncaster-based firm, which specialises in regenerating brownfield sites, has taken 1,578 reservations in the 2013/14 financial year – a rise of 63 per cent. Keepmoat had 882 Help to Buy reservations in the 2013/14 financial year which accounted for 56 per cent of the total.
Chief executive Dave Sheridan said: “To eliminate the chance of a residential property bubble we believe house builders should be given help to supply more homes. Help to Buy is helping hard-working people with small deposits get their foot on the property ladder.
“We believe it should be adjusted on a regional basis so it better meets the buying needs of hard-working families looking to buy homes for less than £250,000.”