Property prices surge past level seen before the financial crisis

Several UK regions saw ­property prices reach fresh all-time highs in the month of July, with the East Midlands, the West Midlands and the south-west now joining London, the east and the south-east in having price levels higher than their pre-financial crisis peaks of 2007/08.

The average house price across the UK has reached a new record high of £272,000 after surging by 11.7 per cent over the last year, according to the official report.

Property values in London continue to rise faster than those in the rest of the country, recording a 19.1 per cent year-on-year jump and taking the average property price in the capital to £514,000.

On a month-on-month basis, property values increased by 1.6 per cent across the UK between June and July.

Estate agents have warned the uncertainty of the independence referendum may have a cooling affect on the Scottish market, as people put off house purchases until the country's economic future become clear.

Faisal Choudhry, head of ­Scottish research at estate agent Savills, said: "Rising house prices is a sign of consumer confidence and a reflection of favourable market conditions and improved mortgage lending. The market as a whole has made good progress in the last couple of years and this is an indication Scotland is catching up with the rest of the UK.

"Growth started in central London and has spread out to the regions and is now reaching the secondary regions away from the major population centres."

He added: "We think that the market will take off in the event of a No vote and the end of the uncertainty surrounding the referendum."

The ONS figures were published on the same day as a report by LSL Property Services/Acadata, whose House Price Index (HPI), which found that growth has slowed in Scotland in the run-up to the crucial vote.

LSL said home sales remained 30 per cent lower than pre-crisis levels, though first-time buyer activity is fuelling record prices in Aberdeenshire and Edinburgh.

Gordon Fowlis, regional managing director of Your Move, said: "A favourable lending environment boosted demand over the summer. There were 9,285 transactions in July, climbing five per cent up from June to reach the highest monthly total since July 2008.

"And this propelled prices to new peaks in July in some of Scotland's centres of employment. Aberdeenshire and Edinburgh have seen transactions soar 20 per cent and 25 per cent respectively over the past year.

"But on the other side of the coin, uncertainty is leaving its trace - and squeezing supply has seen slower overall transactions growth compared to last year."

He added that the market would feel the effect of the referendum decision whichever way the vote was to fall, saying: "A Yes vote would usher in a further 16 months of uncertainty.

"A Scotland outside the UK would open the floodgates to the real questions of currency, exchange rates, mortgage risk, and property taxation.

"Many mortgage-holders could see their LTV shoot up as the implications of borrowing from a bank in a foreign country are unmasked. A No vote doesn't guarantee clarity either - but the mist of ambiguity would clear sooner."

Figures released by the Council of Mortgage Lenders last week showed that the number of mortgages handed out to first-time buyers passed 30,000 in July, ­marking the first time this has happened during a one-month period since August 2007.

The current low interest rate environment is helping to keep borrowing costs down, but home owners have been warned to start thinking now about how they will cope with the prospect of higher payments when the Bank of England base rate eventually starts to move off its historic 0.5 per cent low.

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