House prices surged higher again in August, as Government schemes and increased mortgage lending continued to fuel Britain's housing market.

Property values rose by 3.5% compared with the same time in 2012, taking the average price for a UK home to £170,514, according to Nationwide Building Society.

This marked a slight fall from the 3.9% surge seen in July, which was the biggest annual rise for three years.

Prices rose 0.6% between July and August, marginally lower than the 0.9% monthly hike seen in July.

The data comes after Bank of England governor Mark Carney warned earlier this week of the risks of another housing bubble, amid fears the Government stimulus measures are supporting unsustainable price rises.

He said the bank was "acutely aware" of the potential threats, adding action will be taken to clamp down an overheated property market.

Policy measures such as Funding for Lending and Help to Buy, which allows people to buy a property with a 5% deposit, are boosting the market as they help first time buyers in particular on to the property ladder.

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But there are concerns these schemes will push up house prices and borrowing levels, rather than encouraging the construction of new homes.

Robert Gardner, Nationwide's chief economist, says: "While there have been encouraging signs that house building is starting to recover, construction is still running well below what is likely to be required to keep up with demand."

He added: "The risk is that if demand continues to run ahead of supply, affordability may become stretched."

 

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August house prices