Accompanying these warnings, the Royal Institution of Chartered Surveyors has called for a cap on house price inflation of 5 per cent a year.
For a start, despite the 1 per cent monthly price rise for England and Wales in July reported by the Office of National Statistics, current price growth is vastly under its long-term annual average of 9.4 per cent since 1969. This is a doubling of values approximately every seven years.
Additionally, said Mark Harris, chief executive of London-based Savills Private Finance, even this price bounce has been skewed by figures from London that are not representative of the broader picture across the UK.
In fact, according to the ONS, year-on-year house prices in London were up by 9.7 per cent in July, while those across all of the UK rose by only 3.3 per cent.
Johnny Morris, head of research for London-based Hamptons International, added that the bulk of the rise in London house prices is accounted for by an upsurge in activity in the 10 most well-heeled areas of the capital and is “largely driven by foreign buying, not domestic.”
“To say, then, that any upsurge in the housing market is a product of broader-based price inflation coming from burgeoning domestic demand – and thus worthy of government-led dampening initiatives – is just erroneous,” he underlined.
Indeed, taking into account data from the government’s other house-price recording agency, the Land Registry House Price Index, – UK house prices have risen by just 0.67 per cent a year from 2006 to 2013.
This equates to a fall in real prices of 3.1 per cent a year, compared to growth of 13.22 per cent a year in the previous seven-year period. So, Mr Morris added, in reality, the current rise in prices can be seen as the market correcting back to its state before the crisis, and not symptomatic of an atypical inflationary trend.
“It is another positive indicator that the industry is steadily recovering, with government initiatives stimulating the property market and tempting would-be homeowners to buy,” underlined Brian Murphy, head of lending for the Mortgage Advice Bureau.
Far from ringing alarm bells on a general rising price environment, he added, the recent ONS figures should go some way to ease concerns that Help to Buy is already driving property inflation at a dangerous rate.
In such circumstances then, talk of the coalition government taking action to dampen down prices seems premature.
Andy Knee, chief executive of LMS, said: “Such vast regional discrepancies reaffirm the fact that the existence of the housing bubble is still in question.”
Not only may it be premature, but it may also be damaging to any nascent shoots of economic recovery, according to Naomi Heaton, chief executive of residential funds management house London Central Portfolio.
She said: “Any market manipulation has a dangerous precedent: the bust in 1989 was exacerbated by an artificial boom in sales created by tax changes introduced by the Thatcher government, which coincided with a doubling of base rates to 15 per cent in October 1989, with devastating consequences.”
All the more dangerous, given the highly tenuous nature of the UK’s economic recovery, according to Mr Morris.
In this context, he underlined, it is true that economic growth in Q2 was revised up to 0.7 per cent (from the previous 0.6 per cent) by the ONS, but it was also true that the ONS also managed to completely eradicate the 1989 housing downturn, showing only one period of negative growth, with -1.74 per cent showing up in its figures in 1992.
Simon Watkins is a freelance journalist
