House prices up again in February in UK
House prices were up by 1.8 percent in February in the UK, according to the latest survey by Halifax, part of the HBOS Group (LSE: HBOS). Prices were expected to rise, but only by 0.5 percent. The gains take the average house price in the UK to £192,233, keeping house price inflation at 9.9 percent for the third month in a row.
Despite the increase, the new report said that house prices have only gone up by 2.3 percent in the past three months, less than half the 4.7 percent increase in the three months before that. The chief economist for Halifax, Martin Ellis, said that house prices are likely to rise by 4 percent this year, while Nationwide reports that it expects a rise in prices of between 5 and 8 percent and the Royal Institution of Chartered Surveyors believes the cost of a house will go up by 7 percent in 2007.
The main reason for the rise in house prices currently, according to Mr. Ellis, is that there is a shortage of houses for sale both in newly built homes and in existing homes. However, there are some signs that demand is beginning to decrease but that the lower demand has not yet affected prices. For example, RICS said that enquiries from those interested in buying a home fell last week for the first time in two years. Other factors that will likely slow house price growth as the year progresses, Mr. Ellis said, include real earnings growth that has gone negative and council tax rates that are above inflation levels.