London leads surge in UK home prices

LONDON — Home prices in London are continuing to surge, helping property values across the United Kingdom to post their best annual increase since before the financial crisis.

Data by property website Rightmove showed that asking prices in the UK capital this month jumped 5.2 per cent from January to an average of £541,313 (S$1.14 million). On a year-on-year basis, they rose 11.2 per cent. Nationally, values rose 3.3 per cent from the previous month and 6.9 per cent on-year, the best annual performance since November 2007.

“This month’s large rise is exacerbated by being a rebound from the festive-season lull,” said Mr Miles Shipside, Rightmove Director. “The spring moving season is traditionally the busiest time of the year, so that means agents are likely to advise new sellers to aim high, with the best selling months ahead of them and strong buyer demand in many areas.”

London is leading the housing market as supply fails to keep up with demand and the capital’s economy powers UK expansion. Bank of England Chief Economist Spencer Dale said last week that while the market was not heading for a bubble, policy makers were watching it very carefully after ending mortgage aid through the Funding for Lending scheme last year.

The increase in prices in London has been partially blamed on an influx of foreign capital as overseas investors look to make money in a market that has shown remarkable resilience in the face of the stuttering British economy.

Rightmove is not the only report to show London leading the property market. A report from Acadata last week showed house prices in the UK rose to a record last month, with London values rising faster than any other region.

It is likely that prices will continue to rise. The Rightmove report said that while new properties being listed for sale jumped 18 per cent in February compared with a year ago, supply is still failing to keep pace with demand. AGENCIES