House prices hit new heights in Britain as overheated market continues to boil
British house prices rising at fastest pace in more than three years as government house-buying schemes push prices higher and demand outstrips supply
Tuesday 09 July 2013
British house prices are rising at their fastest pace in more than three years, helped by initiatives to reduce borrowing costs, a survey shows.
The Royal Institution of Chartered Surveyors' seasonally adjusted house price balance jumped to +21 in June from +5 in May - the best reading since January 2010 and the biggest improvement in a single month since 2009.
The balance turned positive in April after being in negative territory for most of the past three years.
"After what has seemed like a very long wait we are finally starting to see what looks like the beginning of a recovery in the housing market," said Peter Bolton King, RICS global residential director.
The survey, combined with data from mortgage lenders Halifax and Nationwide, adds to fears that the government's Funding for Lending and Help to Buy schemes are continuing to heat up an already massively overheated market.
The Funding for Lending scheme, run jointly with the Bank of England, provides banks and building societies with cheap finance if they lend to households and businesses, while the Help to Buy scheme offers government guarantees to help riskier borrowers onto the housing ladder.
The property boom is driven on the back of a huge demand for housing with much less property available. In April, supply grew by 2.8 per cent nationally - but sales agreed jumped 8.2 per cent.
But Britain's housing market recovery has much to do with the price of property in the capital, where house prices are much higher than the rest of the country and are rising faster.
Earlier this year research showed that just 10 London boroughs – Westminster, Kensington & Chelsea, Wandsworth, Barnet, Camden, Richmond, Ealing, Bromley, Hammersmith & Fulham and Lambeth – outstripped the worth of all the properties in Wales, Northern Ireland and Scotland combined.
Figures from property analytics company Hometrack show that average prices in Britain increased 0.4 per cent in June but this figure was skewed by the 0.9 per cent rise in London.
Of the 10 regions Hometrack analyses, prices remained flat in Wales, the north east, north west and Yorkshire and Humberside. In East Anglia they rose by 0.4 per cent, 0.3 per cent in the south east and 0.2 per cent in the south west and Midlands.
A net balance of 45 per cent of surveyors expect home sales to rise over the coming three months, up from 36 per cent in May and the highest reading since the survey began more than a decade ago.
As confidence returns to the market, new buyer enquiries have risen for a sixth consecutive month and at a pace not seen since August 2009.
A separate survey showed British retail sales grew in June, boosted by purchases of clothes and shoes as warmer weather tempted shoppers onto the high street.
Some two-thirds of households own their homes in the UK and rising house prices have typically gone hand-in-hand with rising consumer spending.
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