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House prices, rental numbers both higher

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by Elaine Frei

House prices, rental numbers both higher

In new data released Wednesday, Nationwide building society said that house prices in the UK were up by 0.7 percent in February, sending the annual rate of house price inflation to 10.2 percent, up from 9.3 percent in January. An average house now costs £174,706, over £16,000 more than it did last year at this time.

The new figures come as a bit of a surprise to some analysts following predictions that the housing market would slow down after recent interest rate increases. While some say that the February increase seems to indicate that the market still has some energy in it, they also say that with house price increases smaller than they were previously it is clear that the market is beginning to cool. The conventional wisdom that the new figures will be more of a motivation for the Bank of England to raise interest rates yet again could insure that the market will slow down even further later in the year.

Meanwhile, the Royal Institution of Chartered Surveyors said that the demand for rental housing was up at its fastest rate in nine years as growing house prices dissuaded more and more people from buying. The higher demand for rentals in the housing market were due to a strong economy, high employment, and more people moving into the UK from eastern Europe. Thirty percent more surveyors reported a rise as opposed to a decline in rentals, up from 21 percent in the previous quarter. They also reported a demand for larger rental properties.

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News posted: February 28, 2007

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