House prices up 10.2pc

The average UK mix-adjusted house price in June 2014 was £265,000 and house price annual inflation was 10.7% in England, 3.5% in Wales, 6.0% in Scotland and 4.9% in Northern Ireland.

House prices are increasing strongly across most parts of the UK, the report said, with prices in London again showing the highest growth.

Annual house price increases in England were driven by an annual increase in London of 19.3% and to a lesser extent increases in the South East (9.7%) and the East (7.9%).

Excluding London and the South East, UK house prices increased by 6.3% in the 12 months to June 2014. And on a seasonally adjusted basis, average house prices increased by 0.5% between May and June 2014.

In June 2014, prices paid by first-time buyers were 12.0% higher on average than in June 2013. For owner-occupiers (existing owners), prices increased by 9.5% for the same period.

Jeremy Duncombe, director Legal & General Mortgage Club, said: “The first six months of this year have seen rapid house price growth which is not the good news that some homeowners think.

“Rapid house price inflation makes it harder for people to afford to move house and prices many out of the market.

“Over the coming months a healthy housing market would be characterised by growth at the same level as inflation and at a consistent rate across the whole of the country.

“Regional differences in house price inflation remains an issue and a key challenge for the remainder of the year will be balancing measures to control London without dampening other parts of the country where growth is lower.”

Stephen Johnson, managing director of Commercial Mortgages, Shawbrook Bank: “It is encouraging for the balance of the housing market that house prices in regions outside the Southeast are steadily rising.

“The strength of house prices over the next year has been questioned recently, but the continued strong growth shown in today’s ONS figures suggests it might be too soon to tell if these questions can be answered.

“However, the factors being attributed to the cooling of house prices have limited implications for the private rental sector. Whether it’s the MMR, the new mortgage limits on the Help to Buy scheme, or the continued lack of certainty around new housing supply, they are of less concern to property investors. This is particularly true for those who are confident in their prediction that base rates will not remain this low forever.”

Alex Gosling, managing director, online estate agents, cautioned that buyers and sellers must be scratching their heads at the mixed messages they're getting from the various house price indices.

"Is the housing market cooling or still buoyant? The Nationwide just reported a fall in mortgage lending and Rightmove says asking prices have dropped off.”

And he warned: "Throw in concerns over possible interest rate rises, and talking down the health of the property market could end up being a self-fulfilling prophecy.

"The summer months are rarely the best indictor of how the housing market is performing. Viewing numbers drop off as families head off for their summer holidays. We should get a better idea in September as to which way the property market is heading.

"Where everyone agrees, is the frenzied buying that we were seeing in London a few months ago has dissipated. This may be due to more properties coming onto the market or simply a reality check from buyers that it didn't make sense to buy at any cost.

"If prices in the capital do continue to fall, what knock on effect will this have on other areas of the country where price growth has been more subdued?

"The last thing they need is a wave of panic hitting them from a London property market in decline."

Matt Hutchinson, director of flatshare website, said the ONS report offered grim reading for today’s renters.

"The data shows that house prices for first-time buyers are increasing at a faster rate than they are for owner-occupiers - at 12% relative to 9%. This is making an already difficult position for those in Generation Rent near impossible, especially given that saving for a deposit is being made ever tougher by negligible wage growth.

"The reality of home ownership today is that many people have given up on it altogether. This is especially the case for young renters living in London and the South East of England.

"Many tenants would prefer to be paying a mortgage than rent each month, but face a life of renting instead."