House prices close to all-time high amid reports new Help to Buy scheme to blame for 'soaring' demand from buyers

House prices surged at their fastest annual rate in almost three years in September and remained close to an all-time high recorded the previous month, official figures have shown.

Prices rose by 3.8 per cent year-on-year to reach £245,000 on average, marking a slight decrease on the peak of £246,000 recorded in August, according to the Office for National Statistics (ONS).

The annual uplift is the highest seen since October 2010 and comes amid calls for the Government to ease the upward pressure on house prices being fuelled by its new Help to Buy scheme by building more homes to meet demand.

The figures were released as the Royal Institution of Chartered Surveyors (Rics) called for urgent action to address the supply of homes, which it said is "nowhere near" that which is needed to cope with "soaring" demand from buyers.

Rics said the number of surveyors reporting house prices lifting across the country has surged to an 11-year high as the Government's new Help to Buy scheme fuels "soaring" demand from buyers.

The ONS said that on a seasonally-adjusted basis, UK house prices were unchanged between August and September.

House prices in London have soared by 9.4 per cent over the year to reach £434,000 typically.

The year-on-year increase reflected growth of 4.2 per cent in England, where typical prices reached £255,000, and 1.4 per cent in Wales, where prices were £163,000 on average.

Prices in England have fallen slightly from record levels seen the previous month but are still 0.8 per cent higher than their previous 2008 peak, the ONS said.

The rises were offset by annual falls of 1.1 per cent in Scotland, where typical prices fell to £181,000 and 1.5 per cent in Northern Ireland, where the average price edged down to £127,000.

Prices in Scotland, Wales and Northern Ireland are still well below the peaks seen in the property boom. Northern Ireland has seen the sharpest decline and prices are still at 50 per cent below their previous peak.

The ONS figures also show that first-time buyers face having to pay around 5.3 per cent more for a property than they did a year ago. The typical price paid by a first-time buyer in September was £184,000.

Prices of properties bought by home movers have risen at a slower pace of 3.2 per cent, with the typical price paid by this sector standing at £281,000.

Further evidence of the housing market recovery was also shown in a report by the Council of Mortgage Lenders (CML), which said that lending to home-buyers between July and September was at the strongest levels seen since 2007.

Home loans worth £27.1 billion were handed out in the third quarter of this year, which is the highest quarterly figure the CML has recorded since winter 2007.

Paul Smee, director general of the CML, said the "renewed strength" in the market will help it to gather momentum into 2014.

There are also fresh signs that growing demand from aspiring buyers has boosted sellers' confidence about sticking to their asking prices.

Property search website Zoopla reported that fewer than one in three homes (31 per cent) currently listed for sale has had its original asking price slashed.

This represents a fall from two in five (40 per cent) homes which had had their asking prices cut in November two years ago. The average percentage discount has also fallen to 6.4 per cent, from 7.4 per cent in 2011.

But seller confidence still varies and Zoopla found that just one in five (20 per cent) London properties for sale has had its asking price reduced, compared with nearly half (43 per cent) in Preston.

According to the latest Rics UK housing market report, nearly three-fifths (57 per cent) of surveyors are seeing price rises, marking the highest percentage since June 2002.

Sales volumes are at their highest levels in more than five-and-a-half years as more people move to snap up properties, Rics found.

Simon Rubinsohn, Rics chief economist, said: "The amount of homes currently up for sale is still nowhere near enough to keep up with demand and, in order for the market to function correctly, this imbalance urgently needs to be addressed."

Roger Harding, director of communications, policy and campaigns for charity Shelter, also urged the Government to take "decisive action to tackle our shortage of affordable homes".

Mortgage applications worth £365 million have been received so far by the UK's major lenders in the first month of the new Help to Buy scheme.

NatWest owner Royal Bank of Scotland said yesterday that it has taken 1,075 applications, with almost three-quarters of customers looking to buy their first home. Halifax, which is part of Lloyds Banking Group, has received 1,309 applications.

The Government is offering £12 billion-worth of guarantees under Help to Buy to encourage lenders to offer mortgages to credit-worthy home buyers with deposits as low as 5 per cent.

So far, a handful of products have been launched under the scheme with other major lenders, including Santander and Barclays, planning to come on board at a later date.

Housing minister Kris Hopkins insisted the Government is "pulling out all the stops to get Britain building".

He said: "Housing starts are now a third higher than at the same time last year and it is clear house-building will remain a critical part of our economic recovery."

PA