UK house price inflation has hit a four-year high, according to official figures that will intensify the debate about whether policymakers need to take steps to cool the market.
The average UK house price rose by 9.9% over the year to April, up from 8% inflation in March, driven largely by increases in London, the Office for National Statistics (ONS) said. That was the strongest rise since June 2010.
The figures were released as members of the Bank of England's financial policy committee meet to discuss risks to the UK's financial system, with house prices expected to be a key point of discussion. Last week the chancellor, George Osborne, gave the committee new powers to curb house price rises, which have been flagged as a threat to Britain's economic recovery by ratings agency Fitch and the International Monetary Fund.
The ONS said house prices were increasing strongly across most parts of the UK, with prices in the capital again showing the highest growth. London prices rose 18.7%, the biggest increase since July 2007.
The rise in house prices contrasted with separate official figures showing inflation falling to a five-year low of 1.5% in May.
That left policymakers at the Bank with more mixed news on the economy, said Chris Williamson, chief ecnomist at Markit.
"The divergent data will further complicate the discussion about the appropriate timing of the first increase in interest rates from their current record low," he said.
That fast house price growth in London was followed by the south east at 8.9% and the east at 8.5%. The slowest house price inflation was in Northern Ireland at 2.6% and Wales at 3.3%.
Excluding London and the south east, UK house prices increased by 6.3% over the year to April 2014, the ONS said.
Economists say it is not clear whether the FPC will choose to act this soon on the housing market. Its options include requiring banks to hold more capital against higher risk home loans as well as recommending changes to the government's Help to Buy scheme. The committee will unveil any decisions in its Financial Stability Report on 26 June.
Some commentators say the Bank can afford to hold off taking any house price action for now given recent signs the market may be turning.
"Latest mortgage data and survey evidence suggest that housing market activity has – at least temporarily – lost momentum recently," said Howard Archer, economist at IHS Global Insight.
"This looks to be at least partly due to the introduction of new regulations under the Mortgage Market Review. While the MMR only came into effect on 26 April, it is evident that some banks raised their mortgage lending standards before the new regulations kicked in."
Nationwide, Britain's biggest building society, said last month that the London property market is heading for a "natural correction" with the "frenetic" pace of buying beginning to fade.
This week, Rightmove, the UK's biggest property website, said prices for homes have come "off the boil". For the first time this year, the asking prices posted on the Rightmove website for homes in London fell by 0.5% in early June, compared with the month before, in part due to a rapid increase in sellers rushing to cash in on rising prices.
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