U.K. House Prices Rise for 10th Month as Low Rates Spur DemandEshe Nelson
U.K. house prices rose in all regions of the country for the first time in more than six years last month as low mortgage rates helped the property revival to broaden, Hometrack Ltd. said.
Values across England and Wales increased 0.5 percent from October, the London-based property researcher said in a statement today. Prices jumped 3.8 percent from a year earlier, the most since October 2007.
A strengthening property market, supported by the government’s Help to Buy program, has fueled concerns about a potential bubble, and the Bank of England ended mortgage incentives in its Funding for Lending Scheme last week. Mortgage approvals rose to the highest in almost six years in October, and Hometrack said the steps by the BOE may help to restrain housing activity.
“While Help to Buy has boosted sentiment and increased activity, low mortgage rates have provided homeowners more buying power than at any time previously,” Hometrack said. The FLS change “is likely to result in mortgage rates drifting higher. This will scale back the potential buying power of households which is important to keep price rises in check.”
The effective interest rate on new mortgages fell 5 basis points in October to 3.04 percent, according to a BOE report on Nov. 29.
Price gains last month were led by London and the south east, both up 0.7 percent. Values increased in all 10 regions tracked by the property researcher for the first time since April 2007, said Richard Donnell, director of research.
Hometrack said the major change in the property market this year has been the resumption of price increases outside the capital. This growth “remains muted and far from what can be described as a housing bubble,” Donnell said.
Nationally, new property listings fell 3.5 percent in November, the steepest decline since January, while the number of new buyers registering with estate agents climbed 3 percent. In the past six months, demand has grown 10.6 percent as supply fell 0.6 percent, Hometrack said.