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London house prices rise to near record highs

Asking prices for London homes rose to close to a record in February, helping push national values up the most in almost a decade, Rightmove Plc said.

Average asking prices in the UK capital rose 2.5% from January to 449,252GBP (US$710,300), less than 1,000 pounds below the record reached in October, the operator of Britain’s biggest property website said in a report Monday.

Prices in England and Wales rose 4.1% on the month, the most since April 2002. A lack of supply is helping to prop up prices, while an increase in retail sales in January and better-than-expected services and manufacturing surveys suggest Britain will not fall back into a recession.

Bank of England Governor Mervyn King said this week the economy should “gradually” recover this year.

Nationally, home prices rose 1.4% in January from a year earlier to an average 233,252 GBPs. In London, the annual price increase was 4.3%.

The London districts of Richmond-upon-Thames, Kingston- upon-Thames and Wandsworth recorded the largest monthly increases in asking prices within the capital. Nationally, all 10 regions of England and Wales showed asking prices gained. The southeast led the increase, up 6.9%

While Britain’s economy shrank 0.2% in Q-4 and unemployment held at a 16-yr high of 8.4%, UK retail sales unexpectedly rose for a 2nd month in January. Meanwhile, manufacturing returned to growth in January and expansion in services accelerated.

The onset of the Spring moving season often leads to more ambitious pricing of properties coming to market, partly due to estate agents vying for new seller instructions, and that signals a pent-up demand to move that out-weighs the uncertain economic outlook for Brits.

In a separate release Monday, the Council of Mortgage Lenders said that while UK gross mortgage lending fell 14% to GBP10.5-B in January from the previous month, it was up 10% from a year earlier. A seasonal decline is expected in January, the London-based CML said.

Paul A. Ebeling, Jnr.

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