UK house price growth hits 4-year high: Rightmove

Asking prices for homes in England and Wales rose at their fastest annual pace in nearly four years in April, a survey showed yesterday, suggesting that higher interest rates have done little to tame the market.

Property website Rightmove said prices rose an annual 15.0 per cent between March 11 and April 7, accelerating sharply from 12.2 per cent in the previous month and notching the strongest rate of annual growth since May 2003.

Asking prices leapt 3.6 per cent in the month, the fastest pace since April 2002, pushing up the average price to £236,490 (S$711,291). Rightmove’s figures are not adjusted for seasonal factors.

Richard McGuire, strategist at RBC Capital Markets, said that the report could weigh on the front end of the gilt curve although he noted that asking prices tend to overstate actual selling prices during a slowdown.

‘The Rightmove survey points to some high degree of housing market buoyancy although this report does have a tendency to lag turns in the market,’ he said.

Short sterling interest rate futures were flat in early trade, underperforming euro zone rate futures which were slightly higher.

The Bank of England has raised borrowing costs three times since August and is widely expected to hike interest rates to 5.5 per cent next month to curb inflation.

Bank of England governor Meryvn King has said that he would like to see house price growth moderate. However most house price surveys have depicted a resilient market this year although concerns have been raised over the affordability of houses for first-time buyers.

Rightmove said that the start of the Easter season, when moving home is popular, had boosted asking prices but said affordability constraints may help cool the market later this year.

‘As prices go higher, fewer buyers can afford to get on the ladder or trade up, and that will restrain ongoing increases in many parts of the country,’ said Miles Shipside, commercial director at Rightmove.

The headline surge in asking prices cloaked large discrepancies in regional price growth, the survey showed.

Prices in London’s upmarket Kensington and Chelsea borough rose nearly 90 per cent on the year, but in Wales, asking prices are just 6 per cent higher than a year ago.

Source: The Business Times, 17 April 2007