U.K. house-price growth accelerated in February to the fastest in seven years as London led a recovery that’s spreading across the country.
Prices in England and Wales rose 0.7 percent from the previous month -- the most since April 2007 -- with values in London up 1.1 percent, property researcher Hometrack Ltd. said in an e-mailed statement today. Fifty-one percent of postcodes reported gains, the biggest share in almost a decade.
Bank of England Chief Economist Spencer Dale said in a Bloomberg News interview last week that the revival in the property market is good for the economy, and is still in the early stages in many areas outside London. Policy makers will probably leave their key interest rate unchanged at a record low this week while the unemployment rate hovers above the 7 percent threshold for considering an increase.
“The continued imbalance between supply and demand indicates we can expect further upward pressure on prices in the months ahead,” said Richard Donnell, director of research at Hometrack. Outside of London and the commuter area in the South East, “the rate of growth is more muted with buyers remaining cautious and prices rising slowly off a low base.”
Demand for housing increased the fastest in two years in February, according to the report. Property listings rose 11.2 percent, the biggest supply increase since June 2007. Still, Hometrack said supply is rising from a low base.
Dale said the pickup in transactions will support demand in the economy by spurring house building and construction. BOE data to be published today will probably show mortgage approvals rose to 74,500 in January, according to a Bloomberg survey of 22 economists. That would be the most in six years.
From a year earlier, prices were up 5.4 percent in February, Hometrack said. All 10 regions tracked by the group showed gains on the month and Donnell said the majority of areas showed double-digit increases in demand.
The gains in prices have spurred some concern that the U.K. is facing a bubble and that government incentives are contributing to the pressure. A separate report by LSL property services today showed the average house price for first-time buyers rose 16 percent in January from a year earlier to 155,832 pounds ($261,000).
“Any of us who have lived through any sort of economic history will know you can go from a healthy housing market to an overheating housing market very quickly, and so our job is to worry about those types of things and be alert to it,” Dale said. “We’re fully alert to that risk.”