The relentless rise of house prices has seen the average cost of buying a new home in Britain rocket by eight per cent over the past year, according to new figures from the Office for National Statistics (ONS). It means that the average cost of a property is more than a quarter of a million pounds [£252,000], according to the report - which describes values rising “strongly across most parts of the UK” in the 12 months to March this year.
This comes amid growing concern about the continued escalation in house prices making it harder and harder for people to consider owning their own home. First-time buyers now face having to pay ten per cent more than they did a year ago, with the average price of a starter home now £193,000.
"These figures are yet more proof that our housing market is reaching boiling point,” said Campbell Robb, chief executive of the housing charity Shelter. "With every rise in house prices leaving more people priced out or stuck in cramped homes, rollercoaster house prices are rapidly losing their feel-good factor," he added.
The increase is being fuelled by a boom in London, where prices have gone up 17 per cent in a single year and the average house now costs £459,000. Buyers in England face the biggest rises, with prices up by 8.5 per cent in the past year – almost double the 4.9 per cent increase in Wales and far higher than rises of 0.8 per cent and 0.3 per cent in Scotland and Northern Ireland respectively.
The news comes on the same day as the Prime Minister said he would consider making changes to the Government's flagship Help to Buy mortgage scheme, if the Bank of England suggests they are needed.
Bank Governor Mark Carney recently signalled he is ready to take action to cool the housing market amid growing concerns over the threat that a new property price bubble could pose to the economic recovery.
Mr Carney said the Bank could adopt a range of measures - including imposing a new "affordability test" for borrowers and advising the Government to rein in Help to Buy.
Asked on BBC Radio 4's Today programme if he would consider bringing down the £600,000 Help to Buy threshold, Mr Cameron said: "Of course, we will consider any changes that are proposed by Mark Carney.
"But, as he said, this is a well-targeted scheme and it's helped tens of thousands of people get on the housing ladder and to have mortgages."
Help to Buy was launched last year to give a boost to people struggling to get on the property ladder with a 5 per cent deposit.
Critics of Help to Buy argue it places further upward pressure on house prices by fuelling demand from would-be buyers, without the supply of homes for them to choose from being able to keep up.
TUC general secretary Frances O'Grady said: "Rising house prices across the UK are making it extremely difficult to get a foot on the property ladder, while in the capital this has become an impossible dream for most young people."
The ONS figures were also published as a report from think-tank the Resolution Foundation suggested that around one in 10 mortgage holders risk being "imprisoned" by borrowing deals likely to make their repayments unaffordable amid predicted interest rate rises over the next four years.
The study predicts that around 770,000 vulnerable households will suffer from a limited ability to switch to a better deal and face the likelihood of their monthly repayments eating up at least a third of their disposable income.