Property prices in Britain continued to surge as an upbeat reaction to Bank of England’s decision cut interest rates. According to Halifax, the UK’s largest lender and a part of HBOS (Halifax and Bank of Scotland) PLC banking group, the pricing for houses increased by 1.2 per cent in September, while the annual rate of increase went up by 3.0 per cent. The prices also showed that hike in housing rates in the month of August was by about 1.6 percent.
However, it is substantially less than the increase of 20.5 percent which was registered in September last year. At the same time, house prices rose by 1.8 percent which is the biggest quarterly gain since the same period last year.
According to chief economist Martin Ellis of the Halifax, "The pick-up in monthly house price inflation in August and September is consistent with the rise in market activity over the past few months.” He, however, was not optimistic about the rising prices returning to the massive levels seen in recent years.
Growth in household income and one of the highest rates of employment are being considered as the factors behind this surge in housing market along with Bank of England’s timely help. According to Bank of England, the number of loans approved for purchase of houses now had risen to the level not seen since one year.
Northern England was the leader of the pack with a growth of 6.6 percent. In London, the prices rose by around 3.8 percent.
Property inflation has slowed down considerably in all of Britain over the past 12 months. This year’s inflation has been recorded below 10 percent.
Royal Institute of Chartered Surveyors (RICS) latest report also shows an increase in sale of houses for two consecutive months in August. The enquiries for buying houses in September has touched its highest mark since January 2004.
"The reduction in economic growth this year and the continuing high level of house prices in relation to average earnings are expected to prevent a sustained surge in house prices," said Martin Ellis, sounding a note of caution.
The house pricing activity happening presently will be one of the issues discussed when monetary policy committee of the Bank of England meets on October 6th. Interest rates are not likely to be increased according to economy analysts.
Posted
on : Thu, 06 Oct 2005 16:25 GMT | Mortgages News
By : Chris Rowe
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