The average UK home is increasing in value by more than £50 a day, according to figures from Nationwide, which also show that prices in some London boroughs, including Hackney and Islington, have doubled over the past decade.
Britain's biggest building society said the acceleration in house prices had been "surprisingly quick", with the annual rate of growth now running at 5% nationally and 10% in London – in both cases the strongest figures since 2010. As recently as May this year, the UK annual rate was just 1%.
The figures were published as it emerged that the Treasury is to give the Bank of England a key role in monitoring the impact of its flagship Help to Buy scheme on the housing market.
A stream of positive data from the housing market has led to concern in some quarters that the government may be inflating a bubble with the scheme, which from January is set to make 95% mortgages more easily available.
Nationwide's data is likely to add to those fears. It showed UK house prices rose 0.9% in September, which means the typical home is worth £172,127; the figure a month ago was £170,514.
It said there were signs that the pick-up was becoming increasingly broad-based. For the first time since 2007, all 13 UK regions experienced annual price growth in the third quarter of 2013. However, the southern regions of England continued to enjoy the strongest rates of growth, and the society said the gap between house prices in the north and the south of England had reached a new high, rising beyond £100,000 for the first time.
Typical property values in London are now 8% above their 2007 peak, with the average price-tag at a new record high of £331,338. Lambeth, Newham and Hammersmith and Fulham have seen the strongest growth over the past year, with prices up 14%-16% year-on-year, while Redbridge was the worst performer, with zero growth over the past 12 months.
Nationwide said at least three London boroughs – Hackney, Islington and Westminster – had seen prices double, or more than double, over the past 10 years (the City of London and Kensington and Chelsea were excluded from the research due to low sample size). In the case of Westminster, prices were up by 114%.
Outside the capital, East Anglia was the strongest performing region, with annual price growth of 6.6%, while the north – which includes County Durham, Cumbria and Tyne and Wear – was both the weakest English and UK region, with prices up 0.2% over the year. Scotland saw a 2.2% annual increase in prices, with Aberdeen having enjoyed its own property boom in recent years: prices are up 105% over the past 10 years, compared with 31% and 29% respectively for Edinburgh and Glasgow.
Robert Gardner, Nationwide's chief economist, said: "The acceleration in house price growth from the subdued pace prevailing throughout 2011 and 2012 has been surprisingly quick, though house prices are still some way below their previous peaks in most parts of the country."
He said demand for homes was being supported by an improvement in the availability of mortgages and a reduction in their cost, partly as a result of policy measures such as the Funding for Lending scheme and Help to Buy.
"The improving economic outlook is also encouraging more people to take their first steps into the property market," he added. "Consumer confidence has increased significantly in recent months, thanks to further modest gains in employment and signs that the UK recovery is finally gathering momentum."
'Muted' Land Registry data
Separate figures from the Land Registry gave a more muted picture of house price inflation in England and Wales. Its August price index showed a rise of 0.1% over the month and 1.3% annually to an average of £164,654.
The data, which is based on completed sales, so lags the Nationwide index, also excludes new-build properties, which have experienced price rises following the launch of the first part of Help to Buy, where borrowers can raise interest-free loans from the government.
According to the Land Registry, while prices rose by 7.1% year-on-year in London, they had fallen in four regions: the north-west and north-east of England, Yorkshire & the Humber, and Wales.
On the Isle of Anglesey the rate of price falls over the past 12 months have almost mirrored price rises in London.
Matthew Pointon, property economist at Capital Economics, said much of the upwards pressure on house prices was coming from imbalance between housing supply and demand, which he expected to be short term.
"With fears that the next stage of the Help to Buy scheme will push house prices further out of their reach, some first-time buyers will have been persuaded to bring forward planned purchases," he said. "At the same time, those looking to sell are holding back on the expectation of securing a higher price in the near future."
