Prices in the U.K. capital climbed 3.6 percent from March to an average 572,348 pounds ($958,000), taking the gain from a year earlier to almost 16 percent, the website operator said in an e-mailed report today. Across England and Wales, values rose 2.6 percent to 262,594 pounds, also an all-time high, amid a lack of property for sale in southern England.
Britain’s housing market is being fueled by strengthening economic growth, record-low borrowing costs and official incentive programs. In London, where cash-rich buyers and overseas investors seeking safe assets are also stoking demand, rising house values are spilling into surrounding areas, according to Rightmove.
“While much of the growth since October 2007 is down to the boom in London, the ripple effect from the capital means other southern regions are starting to play catch-up,” Rightmove Director Miles Shipside said in the report. “Supply in much of the south is ridiculously tight.”
The north London boroughs of Brent, Camden and Haringey each saw asking prices rise more than 7 percent this month from March, Rightmove said. Only Richmond-upon-Thames recorded a decline -- 0.5 percent.
Out of 10 regions in England and Wales, the West Midlands was alone in seeing property values drop. As well as London, the southeast, the southwest and East Anglia rose to all-time highs. Northern regions are on average 6 percent below their October 2007 levels, Rightmove said.
While a 13 percent increase in the number of properties coming to market over the past year may help to ease price pressures, the imbalance between supply and demand is more stark in the south, Rightmove said. This helped values on average to rise 3.5 percent in the southern regions in April from March, compared with a 0.8 percent gain in the north.
“While there are some hotspots emerging in the north, the momentum is not nearly as fast-paced and the better match between supply and demand means that the market is running at more sustainable levels,” Shipside said.
The strength in the housing market, partly fueled by the government’s Help to Buy program, has prompted Bank of England officials to warn that they’re ready to act should values look like they’re spiraling out of control.
BOE financial-stability policy makers have the powers needed to take the heat out of Britain’s housing market, according to 68 percent of respondents in the Bloomberg News monthly survey of economists published today.
Ernst & Young LLP’s Item Club said in a report today that it was “sceptical about the likelihood of an unsustainable house-price boom,” even as “market indicators point to further acceleration in activity and prices this year.”
“Caution on the part of lenders,” the introduction of tighter mortgage lending criteria later this month, and the BOE’s macroprudential tools “should deter rapid credit growth, the precursor to past episodes of excessive rises in property values,” it said. “We doubt that government incentives to encourage home purchases will do much to inflate a bubble.”
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