North East house price rises are lagging behind

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House prices have surged to a record peak across the UK - but the North East is still playing catch-up.

Across the UK, prices increased to an average of £284,000 in August after climbing by £2,000 month-on-month, official figures show.

Property values in parts of northern England are now rising at a faster annual pace than those in London, according to the Office for National Statistics (ONS) figures.

House prices across the UK are 5.2% higher than they were a year ago.

A typical first-time buyer faces paying 3.8% more than they would have done a year earlier, with the average price paid for a starter home now at £215,000.

At £298,000 on average, house prices across England are at an all-time high, the ONS said, after increasing by 5.6% over the last year.

The North East is the only region where house prices have yet to surpass their 2008 peak, with average values there standing at £160,000.

Prices in Scotland are still below the record levels seen there in March, standing at £198,000 typically after dipping by 0.9% year-on-year.

In Wales, property values are also below their record level seen in January, standing at £174,000 on average after edging up by 0.8% annually.

House prices in Northern Ireland are still 43% below their 2007 peak, reaching £151,000 after increasing by 2.9% over the last year.

In London, prices increased by 4.2% in the 12 months to August - while in the North West and Yorkshire and the Humber they increased at faster rates of 4.7% and 4.8% respectively.

At £186,000 on average, house prices in Yorkshire and the Humber surpassed their pre-economic downturn peak reached in 2008 for the first time in August.

Prices also hit new records in the North West, the East, the South East and the South West.

While London still has the most expensive property prices, at £522,000 on average, they are slightly down compared with July, the ONS said.

Adrian Gill, director of Reeds Rains and Your Move estate agents, said: “The cheaper northern regions are experiencing the fastest growth in property sales, while a shortage of property stock on the market in the South is slowing activity.”

He said that in London, the more affordable boroughs are driving the market rather than the most expensive areas.

Howard Archer, chief UK and European economist for IHS Global Insight, said that a limited choice of properties for sale for buyers to choose from is “clearly exerting upward pressure on house prices”.

He said: “We expect house prices to see solid increases over the coming months amid firm activity. We expect house prices to rise 7% in 2015 and then by 6% in 2016.”

He said the market is likely to continue to be supported by stronger earnings growth and growing consumer confidence as the economy recovers, as well as continued low mortgage rates.

Campbell Robb, chief executive of Shelter, described the figures as “yet more evidence of how completely out of reach home ownership is becoming for typical families”.

He said: “The only way to provide a stable future for the millions of people on typical incomes bearing the brunt of the housing crisis, is for George Osborne to start listening to ordinary people and invest in homes that they can actually afford.”