U.K. house prices soared the most in almost two years in February to a record as demand for homes rose and London continued to power growth, Acadata said.
Values in England and Wales increased 1 percent from January to 257,951 pounds ($431,000), the real-estate researcher and LSL Property Services Plc said today. That’s the biggest monthly increase since May 2012. All 10 regions tracked by the report registered annual growth in the most recent three months, with London jumping 10.9 percent.
“We are seeing a further strengthening of buyer demand, which combined with a thumping start to the year from the mortgage market, has bolstered confidence,” said Richard Sexton, a director at property appraisal firm e.surv, a unit of LSL. “The market in the capital is steaming ahead at a fast pace, with price growth double that of any other region.”
Home values in England and Wales rose 6 percent from a year earlier and showed “sustained acceleration” in the past three months, according to the report. Transactions totaled 65,750, down from 67,350 in January and 44 percent higher than in February 2013.
Low borrowing costs and government incentives have boosted demand for property, fueling concern that prices may spiral. Bank of England Governor Mark Carney told U.K. lawmakers this week that policy makers are monitoring the market “very closely” and “have to be alive” to the possibility that overheating in London may spread.
Help to Buy
A separate report today underlines the impact of Help to Buy, a Treasury program that allows people to buy a home with a down payment of as little as 5 percent.
Banks offered 11,138 loans to homebuyers with a down payment of less than 15 percent in February, up 74 percent from a year earlier and the most since April 2008, e.surv said. The average loan covered 63.5 percent of the purchase, the highest ratio since the onset of the financial crisis in August 2007.
“Banks are far more willing to lend to borrowers with a limited savings pot,” Sexton said. “New buyers are keen to get on the ladder before house prices rise beyond their reach, and they are utilizing the Help to Buy scheme to get an initial foothold.”
Other reports have suggested price growth may have cooled last month, in part because of adverse weather in some parts of the country. A gauge of values published yesterday by the Royal Institution of Chartered Surveyors fell to 45 in February from 52 a month earlier.