Govt to blame for soaring house prices, says Labour

Guardian News and Media/LondonProperty market experts who as recently as December were predicting flat or even falling house prices this year are rapidly backtracking as evidence mounts that confidence has roared back into the housing market.Price rises averaging up to 5% across the country are now forecast for the year and causing consternation among would-be first-time buyers, who already face a struggle to save for a deposit.An increase of that size would add £8,100 by the end of the year to last December’s average price of £162,000 recorded by the Land Registry. Property website Rightmove will next week double its prediction for growth in asking prices this year to 4%, and the Royal Institution of Chartered Surveyors is poised to push up its forecast from 2% to “the 4% area”.High-end estate agent Knight Frank has reversed its forecast, saying that instead of a 1% fall in 2013 it expects prices could gain 3% by the end of the year.Upmarket rival Savills said rises could be as much as 10 times the 0.5% it predicted at the start of the year.At the beginning of the year forecasters including Hometrack and Nationwide predicted prices would fall.Labour warned that home ownership was moving further out of reach for struggling first-time buyers and laid part of the blame on the Chancellor, George Osborne, saying the Help to Buy schemes announced in his March budget were fuelling the rise in property values. Shadow housing minister Jack Dromey said: “The IMF, Office of Budget Responsibility and the Treasury select committee have all warned that the government’s Help to Buy scheme will push up house prices but have limited impact on increasing badly needed affordable house building.” He added: “The truth is the government has failed to invest in building the affordable homes we desperately need and housebuilding has fallen to its lowest levels since the 1920s.”Rightmove’s latest house price report showed that across England and Wales asking prices were up by 10.4% in the first six months of the year -  growth in asking prices typically drops off in the second half of the year. Rightmove director Miles Shipside said a number of factors had given the market a bigger boost than expected -  the Funding for Lending scheme, launched last summer, which has made cheap Bank of England funding available to lending banks; signs of economic stability internationally and at home; and Help to Buy, which backs purchases of new-build homes with government money.“Barring a raft of bad economic news, we expect these factors to continue to impact positively on the market,” he said.The Halifax said last week that property prices were rising at their fastest rate for three years. Its data followed a Nationwide survey last week revealing a 4% rise in prices in the first six months and the Bank of England too reported that mortgage approvals were at a three-and-a-half-year high.But the market remains skewed towards London and the south-east, with Nationwide reporting at the end of last month that the gap between the capital and the rest of the country is the widest it has ever been.The average London home hit a record of more than £318,000, almost twice the level in the rest of the UK when London is excluded, Nationwide said.Chartered surveyors CBRE have calculated the area of London where properties are worth more than £1,000 per square foot is growing outwards at a rate of 350 metres a year. That area includes Kensington Palace Gardens, which property website Zoopla last month identified as Britain’s most expensive address, with an average residential property price of £36mn.At such prices, Zoopla calculated, the area taken up by a doormat is worth more than £3,500.