House price rises realise bubble fears, says economist

Economics professor says three-quarters of properties in the UK are overvalued, as Zoopla reports property price growth across the country

The average UK home has seen its value rise by £10,329 over the past year, or by £28.30 a day, according to figures from property search engine Zoopla.

This follows research from a leading economics professor that around three-quarters of properties in the UK are overvalued, with a 93% probability that London is already in the grip of a house price "bubble".

"The results raise the risk – although not the certainty – that house prices will fall," said professor James Mitchell, the head of economic modelling and forecasting at Warwick Business School. "But a bubble it appears to be, and we should all – householders, business people and policymakers alike – be alert to this risk."

After London, Wales was the most likely region to be in the middle of a house price bubble with an 83% probability, followed by the north-west at 80%. Only Northern Ireland, Scotland and the east of England do not have over-inflated house prices, according to Mitchell's research, which is based on house price and salary data from the UK's largest mortgage lender the Halifax.

The city that experienced the greatest increase in value over the past year was Newcastle, according to Zoopla's figures, where prices have surged by 10.1% or £16,712. This defies the assumption that the capital sees the largest percentage rises, where average values rose by 10%, or £46,398, to £510,457.

Other cities in the north in the top 10 include Barnsley, Glasgow, Dundee, Aberdeen and York, with rises of more than 6.5% during 2013. The worst performing city was Rotherham where properties fell by 0.1%.

In England overall, semi-detached houses have seen the biggest increase in value, up 6.42%. .

Lawrence Hall from Zoopla said: "This year saw a host of new government initiatives that are now helping the property market to gain stability and set the foundations for a sustainable recovery. As a result, 2013 has witnessed property price growth across most of the country and particularly at the entry level of the market.

"With confidence in the market increasing, 2014 could see further price growth as transaction levels pick up, construction continues and more property comes to the market."

The news comes after concerns were raised by the Royal Institution for Chartered Surveyors about the pace of rising property values. It called on the Bank of England to restrict house price rises to 5% annually amid fears that the market is overheating.

However, Capital Economics said the level of demand, which is stoking the price boom, may ease in 2014 if it becomes clear that large numbers of buyers hoping to access the government's Help to Buy scheme are failing affordability tests.

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UK's first 'social supermarket' opens to help fight food poverty

Community Shop in Goldthorpe gives local shoppers access to surplus food from supermarkets for up to 70% less

Britain's first "social supermarket" opens its doors on Monday, offering shoppers on the verge of food poverty the chance to buy food and drink for up to 70% less than normal high-street prices.

If successful, the Community Shop, in Goldthorpe, near Barnsley, south Yorkshire, which is backed by large retailers and supermarkets, could be replicated elsewhere in Britain.

Community Shop is a subsidiary of Company Shop, Britain's largest commercial re-distributor of surplus food and goods, which works with retailers and manufacturers to tackle their surpluses sustainably and securely.

It sells on residual products, such as those with damaged packaging or incorrect labelling, to membership-only staff shops in factories. The new project goes one step further, located in the community for the first time and also matching surplus food with social need.

Membership of the pilot store – in Goldthorpe, an area of social deprivation – will be restricted to people living in a specific local postcode area who also get welfare support.

Individuals who shop at Community Shop will not only get access to cheaper food, but will also be offered programmes of wider social and financial support, such as debt advice, cookery skills and home budgeting.

The scheme is being supported by retailers, brands and manufacturers, including Asda, Morrisons, Co-operative Food, M&S, Tesco, Mondelez,Ocado, Tetley, Young's and Müller. All are diverting surpluses to the pilot.

Company Shop hopes to open Community Shops in London and beyond next year should the pilot prove successful and sustainable.

Sarah Dunwell, director of environment and social affairs at Company Shop, said: "With many families facing tough times in Barnsley, Company Shop wanted to do more to match surplus stock with people who really need it.

"I was delighted to help develop and deliver the UK's first social supermarket. Industry surplus is hard to avoid, but what Community Shop shows is that if we all work together we can make sure that surplus food delivers lasting social good."

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