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Homeeurope newsUK house prices soar: Biggest jump in 4 years

UK house prices soar: Biggest jump in 4 years

U.K. house prices rose at their fastest rate in over four years in December, the latest jump in a long series which is increasingly causing alarm among analysts.

House prices in the U.K. rose 1.4 percent in December and were 8.4 percent higher year-on-year, according to the latest data from the U.K.-based Nationwide building society.

The single-month increase is the biggest since August 2009 with London house prices leading the trend, having risen 14.9 percent year on year.

"Prices in London are now 14 percent above their 2007 peak," Robert Gardner, Nationwide's chief economist said in the report, "with the price of a typical London home at £345,186 ($567,000)"

Analysts closely watching the U.K.'s apparent return to economic growth throughout 2013 have been warning for some time that the country's booming housing market – abetted by government schemes to boost mortgage lending — is spurring house prices higher. Housing supply also remains low.

(Read more: UKhousing recovery spurs 'bubble' warnings)

The warnings of an impending housing market crash — similar to that seen in the U.K. after the financial crisis struck in 2007 – have prompted the Bank of England to end its mortgage lending support scheme called "Funding for Lending" from January onwards in an attempt to cool something of a runaway housing market.

It might be too little too late, however, according to one analyst who warned that the latest house price data "can only fuel concern that a new housing bubble could really develop in 2014."

"[The] latest data and surveys consistently show markedly rising buyer interest and strengthening housing market activity," Howard Archer, chief U.K. and European economist at IHS Global Insight said in a note to CNBC. "So house prices look set to see further strong increases over the coming months despite the Bank of England now ending "Funding for Lending" support for mortgage lending," he warned.


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