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  • Oct 25, 2014
  • Updated: 4:43pm
PropertyInternational

UK survey rules out housing bubble

PUBLISHED : Tuesday, 01 October, 2013, 12:00am
UPDATED : Tuesday, 01 October, 2013, 5:38pm
 

House prices in England and Wales posted their biggest month-on-month gain in more than six years in September, but talk of a price bubble is overdone, property analysis firm Hometrack said in a survey on Monday.

House prices rose 0.5 per cent from August, the biggest increase since May 2007, Hometrack said. Prices were up 2.4 per cent from the same month last year, the biggest annual increase since December 2007.

British house prices have picked up over the past 12 months, and some are concerned about an unsustainable price boom. But Richard Donnell, Hometrack director of research, played down these fears.

"Prices are rising off a low base and talk of a housing bubble in relation to the national market is overdone," he said.

"We are seeing continued house price growth in London combining with modest gains across other regions and creating a picture of a broadening market recovery," he added.

Hometrack said it expected prices to continue to rise in the short term but cautioned that the market remained very sensitive to changes in demand and especially changing expectations over the outlook for mortgage rates.

Separate data from lender Nationwide released on Friday showed that British house prices shot up at their fastest annual pace in more than three years in September.

House prices have been aided by government schemes to lower banks' borrowing costs and help home-buyers struggling to find large deposits. The latter scheme is set for expansion at the start of 2014.

Britain's finance minister George Osborne said on Thursday that he wanted the Bank of England to keep a closer eye on whether the scheme might stoke a bubble.

Bank of England governor Mark Carney said the market was seeing a turnaround but that levels of activity remained only about two-thirds of their longer-term averages for the sector.

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