Yorkshire lags behind as house prices in the UK hit new record

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house prices have hit a record high but Yorkshire is failing to keep pace with the rest of the country, according to new figures.

Across the UK, house prices have risen by 5.5 per cent in the past year but in Yorkshire the increase was just 0.8 per cent, slower than any other region.

According to the Office of National Statistics, the average house in Yorkshire now costs £167,000 compared with the UK average of £247,000, a new record.

The figures will add weight to fears that the prices being paid for homes are racing ahead of wages and creating a new bubble in the housing market.

They also offer further evidence that the economy of London and the South East is becoming detached from the rest of the UK.

London recorded a 12 per cent annual increase in property prices, pushing the typical house value there to £437,000.

Prices in London are now nearly 17 per cent higher than they were before the credit crunch, while those in the South East and the East of England are now sitting around one per cent higher than their previous 2008 highs.

The ONS figures showed that prices rose in every UK region year-on-year as the housing market continued to pick up pace.

Fears of a looming house price bubble have been growing in recent months as a flurry of would-be home-buyers has entered the market following Government schemes such as Funding for Lending and Help to Buy which have widened mortgage availability.

Funding for Lending gives lenders access to cheap finance on condition they pass on the benefits of this to borrowers, while Help to Buy gives aspiring home-buyers with deposits as low as five per cent help to buy their first house or move up the property ladder.

But analysts have warned that the supply of homes on the market is not enough to keep up with demand, which is putting upward pressure on prices as the market heats up.

The Bank of England recently took the first step in applying the brakes to the property market by announcing it is refocusing Funding for Lending away from mortgages and towards helping small businesses borrow.

Some experts have warned that this could spell the beginning of the end for ultra-low mortgage rates.

Howard Archer, chief UK and European economist for IHS Global Insight, said the “sharp acceleration” in prices in the ONS figures would fuel concerns of a bubble.

He said: “There is a very real risk that house prices could really take off over the coming months, especially if already significantly improving housing market activity and rising buyer interest is lifted appreciably further by the Help to Buy mortgage guarantee scheme which was launched in October.

“Consequently, the decision of the Bank of England and the Treasury to end Funding for Lending support for lending to households from January looks a highly sensible decision.”

Chancellor George Osborne has repeatedly rejected criticism that his Help to Buy scheme has fuelled demand for homes that is outstripping supply.

In his autumn statement earlier this month, however, he announced new measures to encourage house-building including proposals to punish councils financially when they block developments which are later approved by a planning inspector.

He also promised to invest £1bn in a scheme designed to remove financial obstacles to new housing developments going ahead including in East Leeds.

The rising cost of housing has raised wider concerns that homebuyers are agreeing mortgages that they are only able to afford because of record low interest rates.

As confidence grows that the economic recovery has taken hold the Bank of England will look to raise interest rates back to normal levels.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “It is important that buyers plan ahead for potential interest rate rises and ensure they can afford their mortgage once this happens.”