House Prices See Sharpest Rise In A Decade

Asking prices for property in the U.K. rose at the sharpest pace for almost 10 years in February, boosted by a pickup in confidence and an increase in demand from first-time buyers seeking to take advantage of the government’s sales-tax holiday which ends next month, a survey by Rightmove indicated today.

According to Rightmove’s latest index, which measures the price at which a property is advertised for sale and not the achieved price, house prices in mid-February rose 4.1% on the month and were 1.4% higher than a year earlier.

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The monthly increase was the biggest rise since April 2002 and compares with a 0.8% monthly decline and a 0.4% annual gain in January.

“The biggest jump in new sellers’ asking prices for nearly ten years indicates there is pricing power if you are selling the right type of property in the right place,” said Rightmove director Miles Shipside.

“There are also indications that those who are able to buy but had previously lacked the confidence to take the plunge are of a more positive mindset this year.”

Rightmove also noted that the government’s stamp-duty sales tax holiday for first-time buyers purchasing a home costing less than GBP250,000 comes to an end March 24, and there is an increasing number of buyers seeking to take advantage of the tax break.

From March 25, first-time buyers will have to pay the government 1% of the cost of any property they purchase priced up to GBP250,000.

House prices are expected to remain stable over the course of this year, but monthly changes are often volatile, suggesting this month’s big rise isn’t indicative of any sustainable house-price increase.

While consumer confidence is showing signs of improvement, it likely reflects the slower pace of inflation and cheaper energy costs rather than any real expectations for a strong economic performance this year.

The survey also shows that mortgage financing advertising has increased in recent weeks, as has the availability of products requiring only a 10% deposit–something which has been in scarce supply since the beginning of the global credit crunch in 2007.

The details of the survey show that activity is increasing. The length of time to sell a property fell to around 91 days by mid-February from 100 in December.

Prices rose in all regions covered by the survey, the largest was a 6.9% rise in south-east England, followed by a 5.6% increase in northern England over the same period.

Rightmove measured 122,030 asking prices of properties put on sale by estate agents between Jan. 8 and Feb. 11, which Rightmove estimates represents approximately 90% of the total number of residential property advertised for sale over that period.