Housing recovery spreads beyond London and the South-east

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The UK’s housing recovery is spreading beyond London and the South-east to register the most widespread gains in prices for nearly a decade, new figures showed today.

According to February’s national housing survey from Hometrack, 51 per cent of the country’s postcodes recorded higher house prices over the period, the most since July 2004. Average prices increased by 0.7 per cent over the month – the largest monthly increase since April 2007.

There is little sign that the upward momentum will abate, according to research director Richard Donnell. “The continued imbalance between supply and demand indicates we can expect further upward pressure on prices in the months ahead,” he predicted.

The latest evidence of housing market recovery comes almost a year after the launch of Government’s Help to Buy scheme. The Bank of England is keeping a wary eye on property prices and has stopped banks from accessing its Funding for Lending scheme to gain cheap funds for mortgage loans.

Hometrack’s survey of estate agents showed that house price growth accelerated in February. London again experienced the strongest gains of 1.1 per cent, followed by the South East, where prices climbed 0.9 per cent over the month.

Another positive indicator was that demand for housing increased by 17 per cent over the month, the highest monthly increase for two years.

Meanwhile the proportion of the asking price achieved continues to increase and stands at 95.8 per cent, up from 95.3 per cent in January. In London the measure is close to its all-time high and currently stands at 98.8 per cent.

“The importance of low mortgage rates tends to be underplayed but this is an important factor enabling households to purchase homes and bid up the cost of housing with average mortgage rates approaching half the level they were seven years ago,” Mr Donnell added.

He predicted that market sentiment will remain positive which will encourage more buyers into the market.  “There are signs of a supply response and it will be interesting to see if this can be sustained. The upward pressure on prices will only start to moderate if we see a sustained increase in supply or if demand were to weaken which seems unlikely in the near term given the low level of mortgage rates,” he said.