UK house prices have risen by a huge 10.5% over the last year, the steepest rate on record, according to new figures from estate agent Haart.

Property values increased by 1.9% in October alone to reach an average of £224,242. This is the highest average price recorded by Haart since April 2012.

The rising prices are being caused by a divergence in supply and demand, as new buyer enquries have grown by 6.2% in the last year, while the supply of properties has fallen by 10.1% during the same period. This has resulted in 12 buyers chasing every new instruction coming onto the market, pushing prices further upwards.

Paul Smith, CEO of haart, said: “The Government must take drastic action to encourage the release of homes suitable for families and prevent record high price rises in 2016 for the core of the UK property market. The new Help to Buy ISA available from next week should help first-time buyers save for their deposit but it is stimulating demand without addressing the underlying issue of lack of supply.

“While house prices in the rest of the UK are likely to continue their current trajectory in 2016, the top end of the market, particularly in London, will see a price correction because of the impact of Stamp Duty – likely to consist of a 10% drop in value for homes currently priced over £1m. Our data is already beginning to show London falling behind the rest of the UK in terms of growth in house prices as a result of this.”

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