LONDON (Reuters) - Britain is not experiencing a runaway increase in house prices, despite concerns that government schemes are helping buyers fuel another property bubble, chancellor said on Sunday.
Data from the Royal Institution of Chartered Surveyors released in August showed the fastest growth in house prices since 2006, with homes in London increasing in value by more than 8 percent compared with a year ago.
Government schemes to help cash-strapped house buyers are blamed by some for helping push up prices, but the government insists that younger couples in particular need help to get their first home.
Despite criticism from the International Monetary Fund, Britain’s Office for Budget Responsibility and a senior minister, the government will roll out the second phase of its Help to Buy scheme - which offers state-backed mortgage guarantees - in January.
Chancellor George Osborne told BBC television on Sunday that with the possible exception of central London, the market was not overheating.
“In the housing market, outside the centre of London ... there is not some kind of housing boom or some dramatic increases in house prices,” Osborne said.
“There are many many thousands of families ... who can’t begin to afford the mortgage deposits that are required to buy a home ... and I want to help them.”
In August, a Reuters poll of economists showed that a firm majority believed Britain was flirting with another housing boom.
Any signs the market is overheating could force the central bank to raise interest rates from 0.5 percent earlier than planned.
Britain is one of the few major Western economies facing the problem of above-target inflation.
Core inflation, which strips out volatile food and energy costs, has already returned to 2 percent.
Reporting By Costas Pitas; Editing by Andrew Heavens