Europe Economy

UK house prices leap to record high

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The price of houses in the U.K. hit a record high in July, according to online real estate portal Rightmove, which doubled its forecast for 2013 prices and now expects them to rise by 4 percent, up from a previous estimate of 2 percent.

The average property asking price is now at £253,658 ($383,171), Rightmove said on Monday, up 0.3 percent since June and 4.8 percent higher than at the same time last year. In cash value prices have risen £11,561 in a year.

This marks a seventh consecutive monthly rise in the price of property coming to market, and the second successive national record, it said. Prices in the capital still show the biggest increase with London prices gaining 12 percent since July 2012.

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"The market is currently benefiting from the 'aggregation of marginal gains' where incremental improvements across a range of key market drivers compound to slowly but surely build momentum," Miles Shipside, Rightmove's director and housing market analyst said in a press release.

"London will continue to outperform the rest of the country and we also expect the South East, the main beneficiary of the 'over-spill' from the capital, to maintain its strong momentum, both driven by an on-going shortage of supply of property for sale. Asking prices in the capital are currently 29 percent higher than they were five years ago compared with 7 percent in the South East and just 5 percent nationally".

The firm's forward-looking confidence survey - which collates 25,000 responses from home-movers - now shows that 62 percent expect property prices to be higher a year from now, double the 31 percent recorded a year ago.

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The report adds to a slew of positive data for the U.K. housing market. The Council of Mortgage Lenders said on Thursday that there were 42 percent more first-time buyers in May than a year ago. The Royal Institution of Chartered Surveyors' also indicated a price spike last week. Seasonally adjusted house price balance jumped to 21 in June from 5 in May, it said, the best reading since January 2010 and the biggest improvement in a single month since 2009.

In a new report released on Monday, leading economic forecasting group Ernst and Young's ITEM Club predicted that Britain's economy will be supported by an improvement in consumer sentiment and the housing market, but the sudden surge in prices is sure to fuel the debate that government intervention is fueling a dangerous bubble-like rise in the market.

The Bank of England's current quantitative easing (QE) program has run alongside a Funding for Lending Scheme, providing state-backed assistance for first-time buyers. Additionally, U.K. Chancellor of the Exchequer George Osborne announced in his latest budget a £5.4 billion "Help to Buy" mortgage scheme aimed at helping citizens with a limited deposit to purchase property.

Is the UK recovery finally underway?
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(Read More: UK Property Price Rises Stoke Fears of New Bubble)

Critics of the latter measure have included both The International Monetary Fund and former Bank of England Governor Mervyn King who called it "too close for comfort" to the U.S. mortgage guarantee schemes that some blame for triggering the financial crisis.

Peter Spencer, professor of economics and finance at the University of York and advisor at Ernst & Young said that the housing figures on a national basis were getting better, but did not believe in a widespread bubble.

"Outside London, where there is a bit of a bubble , housing is pretty moribund actually," he told CNBC Monday.

By CNBC.com's Matt Clinch. Follow him on Twitter @mattclinch81.