The rate of house price growth increased to 5% in August, according to official government figures, pushing homes further out of the reach of aspiring young buyers already squeezed by rising inflation.
According to the Office for National Statistics, average house prices in the United Kingdom rose by 5 per cent in the year to August, a slight acceleration on the 4.5 per cent in the year to the end of July but in keeping with the pace of growth since the spring.
In London average property prices fell in value for the second consecutive month, by 1pc in August, bringing average annual growth to 2.6pc.
The main contribution to the increase in the average United Kingdom house price came from England, where the annual rate of increase was 5.3% to £244,000. The lowest annual growth was in London, where prices increased by 2.6% over the year, followed by the North East at 3.7%.
Richard Snook, senior economist at PwC, said the data shows relatively little movement in price growth from the previous month.
The Land Registry’s house price index showed prices climbed to £225,956 in August, up 0.5 per cent on the month before. Prices are now just 2.5% higher than they were a year ago.
He suggested the uncertainty over Brexit may be felt more keenly in London than other areas due to the importance of global businesses.
Prices in the City of London, the heart of the capital’s financial district, fell by 5.6% over the year, the biggest fall in the United Kingdom apart from Aberdeenshire.
Founder and CEO of eMoov.co.uk Russell Quirk said the modest growth was positive given “turbulent market conditions”.
It was a mixed picture across the rest of the country: the East Midlands, East of England, North West and South West all recorded strong annual price growth, while the monthly rate slowed.
“It’s testament to the diversity and resilience of the United Kingdom market that this growth is spread across the North West, South West, East and Midlands”.
Yet Jeremy Duncombe, director of Legal and General Mortgage Club, said annual prices were consistently rising as more buyers chased fewer properties.
“It is essential that the Government doesn’t lose focus on addressing the housing crisis and makes good on its promise to build the thousands of new, affordable homes that people desperately need”.