British home prices soar 3.6 per cent this month, at record highs
Prices gain 3.6 per cent this month as housing market benefits from fewer jobless, low interest rates and government mortgage schemes
Asking prices for homes in Britain hit a record high this month, adding to concerns about the speed at which the housing market is growing.
Asking prices rose 3.6 per cent in the four weeks to May 10 - the biggest increase for this period - to an average of £272,003 (HK$3.55 million). They were up 8.9 per cent from a year ago, the highest annual rate since October 2007.
"May is a traditionally bullish price-rise month, though this year's 3.6 per cent jump beats the previous May high of 3.2 per cent set in 2002," said Miles Shipside, a director at Rightmove.
"A late Easter in the heart of the house-hunting season has not only concertinaed the traditional hottest home-moving period by several weeks, but also stagnated seller numbers, further stirring up prices in areas of buoyant demand."
Britain's economy has been growing faster than most of its industrialised peers, with the housing market standing out as it benefits from falling unemployment, record low interest rates and government mortgage schemes.
Bank of England officials have been expressing more concern about the strength of the property market, and targeted measures to curb it are expected next month.
Bank governor Mark Carney said again last week that the first line of defence against risks from the housing market would be to restrain mortgage lending rather than to raise rates.
The data supported the picture of a potential "bubble" forming in London while the rest of Britain was seeing more modest price growth.
Asking prices rose 16.3 per cent in May year on year in the capital, versus an average 4.9 per cent rise in the rest of England and Wales.
"London prices traditionally pick up earlier than the rest of the country, and while it appears to be slowly dragging other regions along in its wake, the difference is still very marked," Shipside said.
The disparity between the property market in London, which attracts cash-rich foreign investors, and the rest of the country has prompted bank officials to stress they do not set policy for the capital alone, but for the country as a whole.
The bank's chief economist, Spencer Dale, recently said the central bank "should be nervous" about the housing market, and deputy governor Jon Cunliffe said it would be "dangerous" to ignore its momentum.
Tougher rules for mortgage lenders came into force last month, requiring stricter checks on borrowers' ability to repay their loans.
Rightmove said that the so-called Mortgage Market Review could help temper the wider market, but added that London needed a "major housing-supply boost" to prevent excessive rises in house prices.