U.K. Housing Recovery Broadens in Market’s Best Year Since 2007

Residential Property in London
Residential property stands near Heathrow Airport as a passenger aircraft comes in to land, in London. Photographer: Jason Alden/Bloomberg

U.K. house prices increased in December and will continue rising this year as the property-market revival broadens, Acadametrics said.

Values in England and Wales increased 0.6 percent to a record 240,134 pounds ($395,300), the real-estate researcher and LSL Property Services Plc said in a report in London today. Prices rose 5.2 percent in 2013 as sales surged to the highest in six years.

Low borrowing costs and government incentives are fueling demand for property in Britain, where Acadametrics said a “universal recovery is really taking hold.” The Bank of England has responded by curtailing mortgage aid to head off a potential bubble even as the government continues its plan to help first-time buyers.

“The market is moving full steam ahead toward widespread recovery,” said Richard Sexton, director at LSL. “However, we’re certainly not in the bubble zone here, with price growth and sales both still some way off their pre-crisis peaks.”

London continues to lead price gains, with values rising an annual 9.3 percent in the past three months, the report showed. The average across England and Wales was 4.8 percent. All 10 regions tracked rose for the fourth consecutive month.

The groups estimate that transactions rose to 785,000 last year, a 17 percent gain from 2012 and the highest since 2007. That would still be a “long way short” of the 1.2 million annual average in the decade before the 2008 financial crisis, they said.

The BOE said this week that mortgage availability increased in the fourth quarter and will continue to rise as the government’s Help to Buy plan improves access to higher loan-to-value products. The central bank kept its key interest rate at a record-low 0.5 percent yesterday in line with guidance set in August for no change at least until unemployment falls to 7 percent.

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