U.K. House Prices Rose in February, Rightmove Says

U.K. property prices accelerated for a second month in February as a shortage of homes for sale mitigated the impact of higher interest rates, a survey showed.

Asking prices rose 0.9 percent after an 0.5 percent increase in January, according to Rightmove, Britain's biggest Web site for property advertisements. A 9.7 percent rise in values in the City of Westminster fueled a 1.1 percent increase for London.

``Everything is turning around in days or weeks,'' said James Gubbins, agent at Dauntons realtors in the London borough of Westminster and Pimlico. ``The current level of interest rates isn't going to affect the market as it is at the moment. They'd have to move another percent.''

Bankers spending bonuses splashed out on luxury properties in London's most expensive neighborhoods and funneled money into rental investments, lifting the cost of housing nationwide. Rightmove said February's gain was the smallest for the month since its survey began five years ago and suggested that price increases may be near a peak.

The Bank of England unexpectedly lifted its benchmark lending rate to 5.25 percent in January, the highest in five years and the third move since August. Last week, policy makers indicated borrowing costs may have to rise again to contain inflation, which touched a decade-high of 3 percent in December.

``February is the traditional start to the home moving season and is a good indicator of what might happen for the rest of the year,'' said Miles Shipside, commercial director of Rightmove. ``People coming to market are thinking they need to be more competitively priced to sell.''

Annual Gain

U.K. house prices may rise about 5 percent to 6 percent this year, Shipside said in an interview. That compares with an 11.5 percent annual increase in February and 13.5 percent growth from a year ago in January.

Gubbins said he recently sold a flat in less than half an hour to an investment banker for 250,000 pounds ($487,000). The property in Edric House, a building on Page Street close to London's Tate Britain museum, will be rented out. Another property nearby on Tachbrook Street sold for 300,000 pounds before agents had a chance to advertise it.

Rightmove said the average number of houses on agents' books rose to 54 properties from 52 in December. The average time properties spent on sale fell to 78 days from 88 in January.

Demand for homes in the capital have pushed London property values to an annual 21.7 percent, the biggest for any U.K. region, Rightmove said. The 58 percent annual gain in Westminster was eclipsed only by the 76.3 percent increase in the borough of Kensington and Chelsea.

Costliest Property

Kensington Square, where an average home costs 5.5 million pounds, tops a list of the U.K.'s most expensive streets, property research Web site mouseprice.com said. Britain's top 10 priciest addresses are in Kensington and Chelsea.

The U.K.'s East Midlands, and Yorkshire and Humberside regions posted the biggest increases last month, at 3.9 percent and 2.7 percent, respectively. The biggest decline was a 1.9 percent slide in Wales.

Shipside's prediction for a slowdown agrees with recent reports showing prices already starting to cool. Last week, the Royal Institution of Chartered Surveyors reported that house prices rose at the slowest pace in seven months last month.

Nationwide Building Society, the No. 3 mortgage lender, has said that price gains were their slowest in eight months in January. Mortgage approvals, an indicator of demand, fell to an eight-month low in December, the Bank of England said last month.

``Policy makers are likely to take the view that it is too early to conclude that recent monetary policy tightening has significantly impacted the housing market,'' said Alan Castle, a U.K. economist at Lehman Brothers Holdings Inc.

source:www.bloomberg.com