It means that in the 12 months to August 2013, UK house prices increased by 3.8%, up from a 3.3% increase in the 12 months to July 2013.
The ONS report says that house price growth remains stable across most of the UK, although prices in London are increasing faster than the UK average.
The year on year increase reflected growth of 4.1% in England, 1.1% in Northern Ireland and 1% in Wales, offset by a fall of 0.7% in Scotland.
In England annual house price increases were driven by London with growth of 8.7%, while the East Midlands saw growth of 3.8% and the West Midlands 3.5%. Excluding London and the South East, UK house prices increased by 2.1% in the 12 months to August 2013.
On a seasonally adjusted basis, UK house prices increased by 0.5% between July and August 2013. The data also shows that in August 2013, prices paid by first time buyers were 4.9% higher on average than in August 2012. For owner occupiers prices increased by 3.3% for the same period.
The figures show that a healthy recovery continues across most parts of the UK with house prices climbing steadily, according to Peter Rollings, chief executive officer at Marsh & Parsons, but he pointed out that prices are still well below the market highs of 2007.
Also, the recovery in many parts of the UK is relatively muted. Northern Ireland and Wales saw modest increases, while average values in Scotland actually fell compared to last year.
‘The London property market operates on an entirely different level to the rest of the country. Across the capital, annual price increases of 9% positively dwarf those in the rest of the UK, and in Prime London this is even higher. We have recorded an 11% increase compared to last year,’ he explained.
He believes that rather than create a bubble, the much anticipated second phase of Help to Buy might actually stabilise prices by encouraging first time sellers to put their properties on the market and take their next step up the property ladder.
‘For the past three quarters, a lack of available property has created an extraordinary premium for those on the market but we are now seeing a gradual increase in supply. In Prime London, we recorded a 5% increase in the number of properties available on the market in the last quarter. This meant that the ratio of supply and demand has begun to stabilise for the first time in a year which can only be good news for those wanting to buy,’ he concluded.
David Newnes, director of LSL Property Services, described the figures as positive news not only for the housing sector, but also for the wider economy given the inherent link between property values and optimistic consumer sentiment.
'In the space of only a few months dramatic progress has been made, placing the UK housing market on the road to a full recovery. The early launch of Help to Buy has helped boost confidence in a strengthening market. However, even before the launch of the scheme, mortgage lending levels were increasing and first time buyers were returning to the market following more confidence in longer term interest rate levels and growth stability returning to house prices,' he said.
'Now Help to Buy is in full effect, it should have an increasing impact as people with lower deposits are now able to enter the market. However the lending flood gates probably aren’t going to open just yet back up to pre-crunch levels. Higher LTV loans have a higher interest rate attached to them and lenders will be looking ever more carefully at borrowers affordability, particularly with the new Mortgage Market Regulations arriving in April next year obliging them to look at things like future affordability if interest rates start to rise,' he explained.
'Without pouring cold water on all the good news, it is essential that the upward momentum is also met head on by an increased supply of housing if we are to sustain growth in the long term and ensure future generations of home buyers aren’t priced out of the market,' he added.
