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PM to consider Help to Buy changes
House prices have risen by 8% in the space of a year according to official figures as the Prime Minister said he would consider making changes to the Government's flagship Help to Buy mortgage scheme.
The typical price of a property across the UK stood at £252,000 in March, which is just £1,000 below a record peak recorded in February by the Office for National Statistics' (ONS) house price index.
In London, values have leapt more than twice as fast as the national average, with a 17.0% annual lift in the capital pushing average prices there to £459,000.
The ONS report said that while London and areas of the South continue to drive house price growth, most parts of the UK are experiencing a "strong" increase in property values.
The figures were published as David Cameron said that he would consider making alterations to Help to Buy, 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% deposit.
But the ONS figures show that a first-time buyer faces having to pay 10% more than they did a year ago to get on the property ladder, with the average price of a starter home standing at £193,000.
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.
All regions across the UK have seen house prices grow across the last year. During the 12 months to March, house prices saw a typical increase of 8.5% in England to reach £263,000, 4.9% in Wales to reach £164,000, 0.8% in Scotland to reach £181,000 and 0.3% in Northern Ireland to reach £132,000, according to the ONS.
In England, the North West has seen the slowest price growth over the last year, with a 3.1% increase taking average prices there to £165,000.
Campbell Robb, chief executive of housing charity Shelter, said: "These figures are yet more proof that our housing market is reaching boiling point.
"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."
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.
Toughened mortgage lending rules recently came into force, meaning that mortgage applicants now face longer and more probing questions about their spending habits, to check that they can not only afford their repayments now but also when interest rates rise.
Housing market experts said these new rules could partially explain why the average house price dropped back by 0.5% month-on-month in March, according to the latest ONS figures. This drop is the first month-on-month fall seen over a year.
Howard Archer, chief UK and European economist for IHS Global Insight, said: "House prices still look more likely than not to see solid increases over the coming months.
"Housing market activity is likely to be supported by substantially improved consumer confidence, markedly rising employment, improving earnings growth and extended low mortgage interest rates, and it is currently being fuelled by the Help to Buy initiatives."
Housing minister Kris Hopkins said: "Help to Buy is ensuring more aspiring home owners can get the help they need to get on the housing ladder, while accounting for less than 3% of total transactions.
"Help to Buy equity loan has helped more than 30,000 people to buy or reserve a new-build home, with 88% of sales going to first-time buyers at an average price of £185,000."